Correlation Between Morgan Stanley and BGF World
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and BGF World 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 BGF World 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 BGF World Gold, you can compare the effects of market volatilities on Morgan Stanley and BGF World 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 BGF World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and BGF World.
Diversification Opportunities for Morgan Stanley and BGF World
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and BGF is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and BGF World Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF World Gold 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 BGF World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF World Gold has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and BGF World go up and down completely randomly.
Pair Corralation between Morgan Stanley and BGF World
Given the investment horizon of 90 days Morgan Stanley is expected to generate 2.99 times less return on investment than BGF World. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.05 times less risky than BGF World. It trades about 0.04 of its potential returns per unit of risk. BGF World Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,721 in BGF World Gold on October 7, 2024 and sell it today you would earn a total of 1,179 from holding BGF World Gold or generate 43.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.67% |
| Values | Daily Returns |
Morgan Stanley Direct vs. BGF World Gold
Performance |
| Timeline |
| Morgan Stanley Direct |
| BGF World Gold |
Morgan Stanley and BGF World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and BGF World
The main advantage of trading using opposite Morgan Stanley and BGF World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, BGF World 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 BGF World will offset losses from the drop in BGF World's long position.| Morgan Stanley vs. U Power Limited | Morgan Stanley vs. Logan Ridge Finance | Morgan Stanley vs. Adient PLC | Morgan Stanley vs. Cars Inc |
| BGF World vs. BGF Euro Markets | BGF World vs. BGF Global Allocation | BGF World vs. BGF Global Allocation | BGF World vs. BGF Euro Markets |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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