Correlation Between Municipal Bond and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Municipal Bond 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 Municipal Bond and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Bond Fund and Morgan Stanley Vitality, you can compare the effects of market volatilities on Municipal Bond 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 Municipal Bond with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Morgan Stanley.
Diversification Opportunities for Municipal Bond and Morgan Stanley
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Municipal and Morgan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Fund and Morgan Stanley Vitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Vitality and Municipal Bond 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 Municipal Bond Fund 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 Vitality has no effect on the direction of Municipal Bond i.e., Municipal Bond and Morgan Stanley go up and down completely randomly.
Pair Corralation between Municipal Bond and Morgan Stanley
Assuming the 90 days horizon Municipal Bond is expected to generate 1268.5 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Municipal Bond Fund is 6.41 times less risky than Morgan Stanley. It trades about 0.0 of its potential returns per unit of risk. Morgan Stanley Vitality is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 587.00 in Morgan Stanley Vitality on November 3, 2024 and sell it today you would earn a total of 31.00 from holding Morgan Stanley Vitality or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Municipal Bond Fund vs. Morgan Stanley Vitality
Performance |
| Timeline |
| Municipal Bond |
| Morgan Stanley Vitality |
Municipal Bond and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Morgan Stanley
The main advantage of trading using opposite Municipal Bond and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond 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.| Municipal Bond vs. Small Pany Growth | Municipal Bond vs. Rational Defensive Growth | Municipal Bond vs. T Rowe Price | Municipal Bond vs. Growth Allocation Fund |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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