Correlation Between Morgan Stanley and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and IShares MSCI 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 MSCI 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 MSCI World, you can compare the effects of market volatilities on Morgan Stanley and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and IShares MSCI.
Diversification Opportunities for Morgan Stanley and IShares MSCI
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and IShares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and iShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI World 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI World has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and IShares MSCI go up and down completely randomly.
Pair Corralation between Morgan Stanley and IShares MSCI
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.9 times more return on investment than IShares MSCI. However, Morgan Stanley Direct is 1.11 times less risky than IShares MSCI. It trades about -0.18 of its potential returns per unit of risk. iShares MSCI World is currently generating about -0.25 per unit of risk. If you would invest 2,074 in Morgan Stanley Direct on December 6, 2024 and sell it today you would lose (76.00) from holding Morgan Stanley Direct or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Morgan Stanley Direct vs. iShares MSCI World
Performance |
| Timeline |
| Morgan Stanley Direct |
| iShares MSCI World |
Morgan Stanley and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and IShares MSCI
The main advantage of trading using opposite Morgan Stanley and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| Morgan Stanley vs. Constellation Brands Class | Morgan Stanley vs. Arm Holdings plc | Morgan Stanley vs. National Beverage Corp | Morgan Stanley vs. Diageo PLC ADR |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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