Correlation Between Morgan Stanley and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Emerging Markets 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 Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Emerging and The Emerging Markets, you can compare the effects of market volatilities on Morgan Stanley and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Emerging Markets.
Diversification Opportunities for Morgan Stanley and Emerging Markets
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Morgan and Emerging is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Emerging and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Emerging Markets go up and down completely randomly.
Pair Corralation between Morgan Stanley and Emerging Markets
Assuming the 90 days horizon Morgan Stanley Emerging is expected to generate 0.42 times more return on investment than Emerging Markets. However, Morgan Stanley Emerging is 2.37 times less risky than Emerging Markets. It trades about 0.26 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.08 per unit of risk. If you would invest 516.00 in Morgan Stanley Emerging on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Morgan Stanley Emerging or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Emerging vs. The Emerging Markets
Performance |
| Timeline |
| Morgan Stanley Emerging |
| Emerging Markets |
Morgan Stanley and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Emerging Markets
The main advantage of trading using opposite Morgan Stanley and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Morgan Stanley vs. Easterly Snow Longshort | Morgan Stanley vs. Quantitative Longshort Equity | Morgan Stanley vs. Angel Oak Ultrashort | Morgan Stanley vs. Boston Partners Longshort |
| Emerging Markets vs. Ab Global Risk | Emerging Markets vs. Commonwealth Global Fund | Emerging Markets vs. 361 Global Longshort | Emerging Markets vs. Ab Global Bond |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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