Correlation Between Morgan Stanley and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Franklin Mutual 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 Mutual 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 Mutual Beacon, you can compare the effects of market volatilities on Morgan Stanley and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Franklin Mutual.
Diversification Opportunities for Morgan Stanley and Franklin Mutual
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Morgan and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Global and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Franklin Mutual go up and down completely randomly.
Pair Corralation between Morgan Stanley and Franklin Mutual
Assuming the 90 days horizon Morgan Stanley Global is expected to generate 1.49 times more return on investment than Franklin Mutual. However, Morgan Stanley is 1.49 times more volatile than Franklin Mutual Beacon. It trades about 0.33 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.3 per unit of risk. If you would invest 1,294 in Morgan Stanley Global on September 2, 2024 and sell it today you would earn a total of 79.00 from holding Morgan Stanley Global or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Global vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Morgan Stanley Global |
| Franklin Mutual Beacon |
Morgan Stanley and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Franklin Mutual
The main advantage of trading using opposite Morgan Stanley and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual'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 Mutual vs. Rbc Global Opportunities | Franklin Mutual vs. Morgan Stanley Global | Franklin Mutual vs. Mirova Global Green | Franklin Mutual vs. Us Global Investors |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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