Correlation Between Morgan Stanley and American Beacon
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and American Beacon 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 American Beacon 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 American Beacon Twentyfour, you can compare the effects of market volatilities on Morgan Stanley and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and American Beacon.
Diversification Opportunities for Morgan Stanley and American Beacon
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and American is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Global and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Twen has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and American Beacon go up and down completely randomly.
Pair Corralation between Morgan Stanley and American Beacon
Assuming the 90 days horizon Morgan Stanley Global is expected to generate 11.74 times more return on investment than American Beacon. However, Morgan Stanley is 11.74 times more volatile than American Beacon Twentyfour. It trades about 0.33 of its potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.46 per unit of risk. If you would invest 1,296 in Morgan Stanley Global on September 3, 2024 and sell it today you would earn a total of 77.00 from holding Morgan Stanley Global or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Global vs. American Beacon Twentyfour
Performance |
| Timeline |
| Morgan Stanley Global |
| American Beacon Twen |
Morgan Stanley and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and American Beacon
The main advantage of trading using opposite Morgan Stanley and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Morgan Stanley vs. Dreyfus Natural Resources | Morgan Stanley vs. Salient Mlp Energy | Morgan Stanley vs. Energy Basic Materials | Morgan Stanley vs. Calvert Global Energy |
| American Beacon vs. Dodge Cox Emerging | American Beacon vs. Dodge Income Fund | American Beacon vs. Hotchkis Wiley High | American Beacon vs. T Rowe Price |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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