Correlation Between Morgan Stanley and Affiliated Managers
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Affiliated Managers 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 Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Affiliated Managers Group, you can compare the effects of market volatilities on Morgan Stanley and Affiliated Managers 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 Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Affiliated Managers.
Diversification Opportunities for Morgan Stanley and Affiliated Managers
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Affiliated is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers 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 are associated (or correlated) with Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Affiliated Managers go up and down completely randomly.
Pair Corralation between Morgan Stanley and Affiliated Managers
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.02 times more return on investment than Affiliated Managers. However, Morgan Stanley is 1.02 times more volatile than Affiliated Managers Group. It trades about 0.07 of its potential returns per unit of risk. Affiliated Managers Group is currently generating about 0.03 per unit of risk. If you would invest 8,129 in Morgan Stanley on August 27, 2024 and sell it today you would earn a total of 5,340 from holding Morgan Stanley or generate 65.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Affiliated Managers Group
Performance |
| Timeline |
| Morgan Stanley |
| Affiliated Managers |
Morgan Stanley and Affiliated Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Affiliated Managers
The main advantage of trading using opposite Morgan Stanley and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Affiliated Managers 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 Affiliated Managers will offset losses from the drop in Affiliated Managers' long position.| Morgan Stanley vs. Visa Class A | Morgan Stanley vs. Diamond Hill Investment | Morgan Stanley vs. Distoken Acquisition | Morgan Stanley vs. AllianceBernstein Holding LP |
| Affiliated Managers vs. Brightsphere Investment Group | Affiliated Managers vs. Franklin Templeton Limited | Affiliated Managers vs. Blackrock Muni Intermediate | Affiliated Managers vs. Munivest Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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