Correlation Between Growth Portfolio and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Growth Portfolio and Morgan Stanley 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 Growth Portfolio and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Portfolio Class and Morgan Stanley Multi, you can compare the effects of market volatilities on Growth Portfolio and Morgan Stanley 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 Growth Portfolio with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Portfolio and Morgan Stanley.
Diversification Opportunities for Growth Portfolio and Morgan Stanley
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and Morgan is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class and Morgan Stanley Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Multi and Growth Portfolio 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 Growth Portfolio Class are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Multi has no effect on the direction of Growth Portfolio i.e., Growth Portfolio and Morgan Stanley go up and down completely randomly.
Pair Corralation between Growth Portfolio and Morgan Stanley
Assuming the 90 days horizon Growth Portfolio Class is expected to generate 1.07 times more return on investment than Morgan Stanley. However, Growth Portfolio is 1.07 times more volatile than Morgan Stanley Multi. It trades about 0.53 of its potential returns per unit of risk. Morgan Stanley Multi is currently generating about 0.55 per unit of risk. If you would invest 4,686 in Growth Portfolio Class on August 28, 2024 and sell it today you would earn a total of 1,179 from holding Growth Portfolio Class or generate 25.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Portfolio Class vs. Morgan Stanley Multi
Performance |
| Timeline |
| Growth Portfolio Class |
| Morgan Stanley Multi |
Growth Portfolio and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Portfolio and Morgan Stanley
The main advantage of trading using opposite Growth Portfolio and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Portfolio position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Growth Portfolio vs. Emerging Markets Equity | Growth Portfolio vs. Global Fixed Income | Growth Portfolio vs. Global Fixed Income | Growth Portfolio vs. Global Fixed Income |
| Morgan Stanley vs. Emerging Markets Equity | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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