Correlation Between Morgan Stanley and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Investec Emerging 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 Investec Emerging 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 Investec Emerging Markets, you can compare the effects of market volatilities on Morgan Stanley and Investec Emerging 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 Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Investec Emerging.
Diversification Opportunities for Morgan Stanley and Investec Emerging
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Morgan and Investec is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Emerging and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec 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 Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Investec Emerging go up and down completely randomly.
Pair Corralation between Morgan Stanley and Investec Emerging
Assuming the 90 days horizon Morgan Stanley Emerging is expected to under-perform the Investec Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Morgan Stanley Emerging is 1.5 times less risky than Investec Emerging. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Investec Emerging Markets is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,090 in Investec Emerging Markets on October 25, 2024 and sell it today you would lose (8.00) from holding Investec Emerging Markets or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley Emerging vs. Investec Emerging Markets
Performance |
| Timeline |
| Morgan Stanley Emerging |
| Investec Emerging Markets |
Morgan Stanley and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Investec Emerging
The main advantage of trading using opposite Morgan Stanley and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Investec Emerging 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.| Morgan Stanley vs. Vanguard Total Stock | Morgan Stanley vs. Vanguard 500 Index | Morgan Stanley vs. Vanguard Total Stock | Morgan Stanley vs. Vanguard Total Stock |
| Investec Emerging vs. Ab All Market | Investec Emerging vs. Barings Emerging Markets | Investec Emerging vs. Alphacentric Hedged Market | Investec Emerging vs. Dws Emerging Markets |
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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