Correlation Between Morgan Stanley and American Beacon
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and American Beacon 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 American Beacon 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 American Beacon Shapiro, you can compare the effects of market volatilities on Morgan Stanley and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and American Beacon.
Diversification Opportunities for Morgan Stanley and American Beacon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and American is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and American Beacon go up and down completely randomly.
Pair Corralation between Morgan Stanley and American Beacon
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.64 times more return on investment than American Beacon. However, Morgan Stanley is 1.64 times more volatile than American Beacon Shapiro. It trades about 0.33 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.09 per unit of risk. If you would invest 1,996 in Morgan Stanley Direct on September 13, 2024 and sell it today you would earn a total of 143.00 from holding Morgan Stanley Direct or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Morgan Stanley Direct vs. American Beacon Shapiro
Performance |
| Timeline |
| Morgan Stanley Direct |
| American Beacon Shapiro |
Morgan Stanley and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and American Beacon
The main advantage of trading using opposite Morgan Stanley and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Morgan Stanley vs. Tesla Inc | Morgan Stanley vs. Genfit | Morgan Stanley vs. Pinterest | Morgan Stanley vs. Tarsus Pharmaceuticals |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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