Correlation Between Europacific Growth and Morgan Stanley

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

By analyzing existing cross correlation between Europacific Growth Fund and Morgan Stanley Global, you can compare the effects of market volatilities on Europacific Growth 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 Europacific Growth with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Morgan Stanley.

Diversification Opportunities for Europacific Growth and Morgan Stanley

0.85

Correlation Coefficient

Europacific Growth  Morgan Stanley

Very poor diversification

The 3 months correlation between EUROPACIFIC and Morgan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Morgan Stanley Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Global and Europacific Growth 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 Europacific Growth 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 Global has no effect on the direction of Europacific Growth i.e., Europacific Growth and Morgan Stanley go up and down completely randomly.

Pair Corralation between Europacific Growth and Morgan Stanley

Assuming the 90 days horizon Europacific Growth Fund is expected to generate 0.7 times more return on investment than Morgan Stanley. However, Europacific Growth Fund is 1.43 times less risky than Morgan Stanley. It trades about 0.01 of its potential returns per unit of risk. Morgan Stanley Global is currently generating about 0.01 per unit of risk. If you would invest  5,106  in Europacific Growth Fund on October 24, 2024 and sell it today you would earn a total of  201.00  from holding Europacific Growth Fund or generate 3.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Europacific Growth Fund  vs.  Morgan Stanley Global

Europacific Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europacific Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Europacific Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Morgan Stanley Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europacific Growth and Morgan Stanley

The main advantage of trading using opposite Europacific Growth and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth 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.

The idea behind Europacific Growth Fund and Morgan Stanley Global 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.