Correlation Between Global Core and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Global Core and Morgan Stanley 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 Global Core and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Portfolio and Morgan Stanley Government, you can compare the effects of market volatilities on Global Core and Morgan Stanley 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 Global Core with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Core and Morgan Stanley.
Diversification Opportunities for Global Core and Morgan Stanley
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Global and Morgan is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Morgan Stanley Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Government and Global Core 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 Global E Portfolio are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Government has no effect on the direction of Global Core i.e., Global Core and Morgan Stanley go up and down completely randomly.
Pair Corralation between Global Core and Morgan Stanley
Assuming the 90 days horizon Global E Portfolio is expected to generate 0.8 times more return on investment than Morgan Stanley. However, Global E Portfolio is 1.25 times less risky than Morgan Stanley. It trades about 0.13 of its potential returns per unit of risk. Morgan Stanley Government is currently generating about 0.04 per unit of risk. If you would invest 1,664 in Global E Portfolio on September 4, 2024 and sell it today you would earn a total of 518.00 from holding Global E Portfolio or generate 31.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Global E Portfolio vs. Morgan Stanley Government
Performance |
| Timeline |
| Global E Portfolio |
| Morgan Stanley Government |
Global Core and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Core and Morgan Stanley
The main advantage of trading using opposite Global Core and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Core position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Global Core vs. Emerging Markets Equity | Global Core vs. Global Fixed Income | Global Core vs. Global Fixed Income | Global Core vs. Global Fixed Income |
| Morgan Stanley vs. Putnam Convertible Incm Gwth | Morgan Stanley vs. Rationalpier 88 Convertible | Morgan Stanley vs. Allianzgi Convertible Income | Morgan Stanley vs. Calamos Dynamic Convertible |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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