Correlation Between Morgan Stanley and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Emerging Markets 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 Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Multi and Emerging Markets Equity, you can compare the effects of market volatilities on Morgan Stanley and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Emerging Markets.
Diversification Opportunities for Morgan Stanley and Emerging Markets
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and Emerging is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Multi and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity 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 Multi are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Emerging Markets go up and down completely randomly.
Pair Corralation between Morgan Stanley and Emerging Markets
Assuming the 90 days horizon Morgan Stanley Multi is expected to under-perform the Emerging Markets. In addition to that, Morgan Stanley is 3.47 times more volatile than Emerging Markets Equity. It trades about -0.11 of its total potential returns per unit of risk. Emerging Markets Equity is currently generating about -0.29 per unit of volatility. If you would invest 1,386 in Emerging Markets Equity on October 12, 2024 and sell it today you would lose (50.00) from holding Emerging Markets Equity or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Multi vs. Emerging Markets Equity
Performance |
| Timeline |
| Morgan Stanley Multi |
| Emerging Markets Equity |
Morgan Stanley and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Emerging Markets
The main advantage of trading using opposite Morgan Stanley and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' 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 |
| Emerging Markets vs. Dws Equity Sector | Emerging Markets vs. Doubleline Core Fixed | Emerging Markets vs. Ab Select Equity | Emerging Markets vs. Locorr Dynamic Equity |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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