Correlation Between Morgan Stanley and Mexico Equity

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Mexico Equity 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 Mexico Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley China and Mexico Equity And, you can compare the effects of market volatilities on Morgan Stanley and Mexico Equity 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 Mexico Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Mexico Equity.

Diversification Opportunities for Morgan Stanley and Mexico Equity

0.28

Correlation Coefficient

Morgan Stanley  Mexico Equity

Modest diversification

The 3 months correlation between Morgan and Mexico is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley China and Mexico Equity And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexico Equity And 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 China are associated (or correlated) with Mexico Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexico Equity And has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Mexico Equity go up and down completely randomly.

Pair Corralation between Morgan Stanley and Mexico Equity

Considering the 90-day investment horizon Morgan Stanley China is expected to generate 2.75 times more return on investment than Mexico Equity. However, Morgan Stanley is 2.75 times more volatile than Mexico Equity And. It trades about 0.08 of its potential returns per unit of risk. Mexico Equity And is currently generating about -0.07 per unit of risk. If you would invest  1,132  in Morgan Stanley China on September 13, 2024 and sell it today you would earn a total of  161.00  from holding Morgan Stanley China or generate 14.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Morgan Stanley China  vs.  Mexico Equity And

Morgan Stanley China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley China are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unsteady basic indicators, Morgan Stanley reported solid returns over the last few months and may actually be approaching a breakup point.

Mexico Equity And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mexico Equity And has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Mexico Equity is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Morgan Stanley and Mexico Equity

The main advantage of trading using opposite Morgan Stanley and Mexico Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Mexico Equity 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 Mexico Equity will offset losses from the drop in Mexico Equity's long position.

The idea behind Morgan Stanley China and Mexico Equity And pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.