Correlation Between Nasdaq 100 and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Morgan Stanley Counterpoint, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Morgan Stanley.
Diversification Opportunities for Nasdaq 100 and Morgan Stanley
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and Morgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Morgan Stanley Counterpoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Count and Nasdaq 100 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 Nasdaq 100 Index 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 Count has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Morgan Stanley go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Morgan Stanley
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 0.75 times more return on investment than Morgan Stanley. However, Nasdaq 100 Index Fund is 1.33 times less risky than Morgan Stanley. It trades about 0.12 of its potential returns per unit of risk. Morgan Stanley Counterpoint is currently generating about 0.08 per unit of risk. If you would invest 2,820 in Nasdaq 100 Index Fund on August 31, 2024 and sell it today you would earn a total of 2,442 from holding Nasdaq 100 Index Fund or generate 86.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 87.03% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Morgan Stanley Counterpoint
Performance |
| Timeline |
| Nasdaq 100 Index |
| Morgan Stanley Count |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nasdaq 100 and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Morgan Stanley
The main advantage of trading using opposite Nasdaq 100 and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Europacific Growth Fund | Nasdaq 100 vs. Washington Mutual Investors | Nasdaq 100 vs. Capital World Growth | Nasdaq 100 vs. HUMANA INC |
| Morgan Stanley vs. Ab Value Fund | Morgan Stanley vs. Growth Opportunities Fund | Morgan Stanley vs. Nasdaq 100 Index Fund | Morgan Stanley vs. Volumetric Fund Volumetric |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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