Correlation Between Western Asset and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Morgan Stanley Institutional, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Morgan Stanley.
Diversification Opportunities for Western Asset and Morgan Stanley
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Morgan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified 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 Western Asset 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 Western Asset Diversified 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 Western Asset i.e., Western Asset and Morgan Stanley go up and down completely randomly.
Pair Corralation between Western Asset and Morgan Stanley
Assuming the 90 days horizon Western Asset is expected to generate 2.27 times less return on investment than Morgan Stanley. In addition to that, Western Asset is 2.25 times more volatile than Morgan Stanley Institutional. It trades about 0.02 of its total potential returns per unit of risk. Morgan Stanley Institutional is currently generating about 0.12 per unit of volatility. If you would invest 94.00 in Morgan Stanley Institutional on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Morgan Stanley Institutional or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Western Asset Diversified vs. Morgan Stanley Institutional
Performance |
| Timeline |
| Western Asset Diversified |
| Morgan Stanley Insti |
Western Asset and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Morgan Stanley
The main advantage of trading using opposite Western Asset and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Morgan Stanley vs. Wasatch Small Cap | Morgan Stanley vs. Pioneer Diversified High | Morgan Stanley vs. Fidelity Advisor Diversified | Morgan Stanley vs. Western Asset Diversified |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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