Correlation Between Morgan Stanley and BlackRock Municipal
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and BlackRock Municipal 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 BlackRock Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and BlackRock Municipal Income, you can compare the effects of market volatilities on Morgan Stanley and BlackRock Municipal 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 BlackRock Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and BlackRock Municipal.
Diversification Opportunities for Morgan Stanley and BlackRock Municipal
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and BlackRock is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and BlackRock Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Municipal 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 BlackRock Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Municipal has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and BlackRock Municipal go up and down completely randomly.
Pair Corralation between Morgan Stanley and BlackRock Municipal
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 2.08 times more return on investment than BlackRock Municipal. However, Morgan Stanley is 2.08 times more volatile than BlackRock Municipal Income. It trades about 0.07 of its potential returns per unit of risk. BlackRock Municipal Income is currently generating about 0.03 per unit of risk. If you would invest 8,342 in Morgan Stanley on August 24, 2024 and sell it today you would earn a total of 5,127 from holding Morgan Stanley or generate 61.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. BlackRock Municipal Income
Performance |
| Timeline |
| Morgan Stanley |
| BlackRock Municipal |
Morgan Stanley and BlackRock Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and BlackRock Municipal
The main advantage of trading using opposite Morgan Stanley and BlackRock Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, BlackRock Municipal 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 BlackRock Municipal will offset losses from the drop in BlackRock Municipal's long position.| Morgan Stanley vs. JPMorgan Chase Co | Morgan Stanley vs. Wells Fargo | Morgan Stanley vs. Citigroup | Morgan Stanley vs. American Express |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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