Correlation Between Morgan Stanley and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Payden Emerging 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 Payden Emerging 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 Payden Emerging Markets, you can compare the effects of market volatilities on Morgan Stanley and Payden Emerging 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 Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Payden Emerging.
Diversification Opportunities for Morgan Stanley and Payden Emerging
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Morgan and Payden is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Global and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets 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 Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Payden Emerging go up and down completely randomly.
Pair Corralation between Morgan Stanley and Payden Emerging
Assuming the 90 days horizon Morgan Stanley Global is expected to generate 2.84 times more return on investment than Payden Emerging. However, Morgan Stanley is 2.84 times more volatile than Payden Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about 0.11 per unit of risk. If you would invest 1,125 in Morgan Stanley Global on August 26, 2024 and sell it today you would earn a total of 243.00 from holding Morgan Stanley Global or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Global vs. Payden Emerging Markets
Performance |
| Timeline |
| Morgan Stanley Global |
| Payden Emerging Markets |
Morgan Stanley and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Payden Emerging
The main advantage of trading using opposite Morgan Stanley and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Payden Emerging 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 Payden Emerging will offset losses from the drop in Payden Emerging'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 E Portfolio |
| Payden Emerging vs. Barings Global Floating | Payden Emerging vs. Morgan Stanley Global | Payden Emerging vs. T Rowe Price | Payden Emerging vs. Artisan Global Unconstrained |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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