Correlation Between Morgan Stanley and Franklin High
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Franklin High at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Morgan Stanley and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Global and Franklin High Income, you can compare the effects of market volatilities on Morgan Stanley and Franklin High and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Morgan Stanley with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Franklin High.
Diversification Opportunities for Morgan Stanley and Franklin High
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Morgan and Franklin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Global and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and Morgan Stanley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Morgan Stanley Global are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Income has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Franklin High go up and down completely randomly.
Pair Corralation between Morgan Stanley and Franklin High
Assuming the 90 days horizon Morgan Stanley Global is expected to generate 3.38 times more return on investment than Franklin High. However, Morgan Stanley is 3.38 times more volatile than Franklin High Income. It trades about 0.05 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.15 per unit of risk. If you would invest 1,218 in Morgan Stanley Global on September 2, 2024 and sell it today you would earn a total of 155.00 from holding Morgan Stanley Global or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Global vs. Franklin High Income
Performance |
| Timeline |
| Morgan Stanley Global |
| Franklin High Income |
Morgan Stanley and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Franklin High
The main advantage of trading using opposite Morgan Stanley and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Franklin High can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin High will offset losses from the drop in Franklin High's long position.| Morgan Stanley vs. Emerging Markets Equity | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income |
| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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