Correlation Between Putnam Global and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Putnam Global 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 Putnam Global and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Global Financials and Morgan Stanley Institutional, you can compare the effects of market volatilities on Putnam Global 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 Putnam Global with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Morgan Stanley.
Diversification Opportunities for Putnam Global and Morgan Stanley
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Morgan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Morgan Stanley Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Insti and Putnam Global 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 Putnam Global Financials 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 Insti has no effect on the direction of Putnam Global i.e., Putnam Global and Morgan Stanley go up and down completely randomly.
Pair Corralation between Putnam Global and Morgan Stanley
Assuming the 90 days horizon Putnam Global is expected to generate 1.83 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Putnam Global Financials is 1.4 times less risky than Morgan Stanley. It trades about 0.2 of its potential returns per unit of risk. Morgan Stanley Institutional is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,578 in Morgan Stanley Institutional on November 5, 2024 and sell it today you would earn a total of 56.00 from holding Morgan Stanley Institutional or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Financials vs. Morgan Stanley Institutional
Performance |
| Timeline |
| Putnam Global Financials |
| Morgan Stanley Insti |
Putnam Global and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Morgan Stanley
The main advantage of trading using opposite Putnam Global and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global 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.| Putnam Global vs. Barings Active Short | Putnam Global vs. Kinetics Market Opportunities | Putnam Global vs. Locorr Market Trend | Putnam Global vs. Nasdaq 100 2x Strategy |
| Morgan Stanley vs. T Rowe Price | Morgan Stanley vs. Gmo Quality Fund | Morgan Stanley vs. Intal High Relative | Morgan Stanley vs. Versatile Bond Portfolio |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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