Correlation Between Morgan Stanley and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Direct and iShares Trust, you can compare the effects of market volatilities on Morgan Stanley and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and IShares Trust.
Diversification Opportunities for Morgan Stanley and IShares Trust
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and IShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Direct are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and IShares Trust go up and down completely randomly.
Pair Corralation between Morgan Stanley and IShares Trust
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 2.83 times more return on investment than IShares Trust. However, Morgan Stanley is 2.83 times more volatile than iShares Trust. It trades about 0.24 of its potential returns per unit of risk. iShares Trust is currently generating about 0.17 per unit of risk. If you would invest 2,029 in Morgan Stanley Direct on September 14, 2024 and sell it today you would earn a total of 101.00 from holding Morgan Stanley Direct or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Direct vs. iShares Trust
Performance |
| Timeline |
| Morgan Stanley Direct |
| iShares Trust |
Morgan Stanley and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and IShares Trust
The main advantage of trading using opposite Morgan Stanley and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Morgan Stanley vs. Sun Country Airlines | Morgan Stanley vs. Arm Holdings plc | Morgan Stanley vs. Ultra Clean Holdings | Morgan Stanley vs. Valens |
| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. EA Series Trust | IShares Trust vs. Aptus Defined Risk |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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