Correlation Between Cornerstone Strategic and Morgan Stanley

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

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

Diversification Opportunities for Cornerstone Strategic and Morgan Stanley

0.1

Correlation Coefficient

Cornerstone Strategic  Morgan Stanley

Average diversification

The 3 months correlation between Cornerstone and Morgan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and Morgan Stanley India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley India and Cornerstone Strategic 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 Cornerstone Strategic Value 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 India has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Morgan Stanley go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and Morgan Stanley

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to under-perform the Morgan Stanley. In addition to that, Cornerstone Strategic is 1.52 times more volatile than Morgan Stanley India. It trades about -0.1 of its total potential returns per unit of risk. Morgan Stanley India is currently generating about -0.05 per unit of volatility. If you would invest  2,525  in Morgan Stanley India on December 29, 2024 and sell it today you would lose (83.00) from holding Morgan Stanley India or give up 3.29% of portfolio value over 90 days.

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

Cornerstone Strategic Value  vs.  Morgan Stanley India

Cornerstone Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cornerstone Strategic Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Morgan Stanley India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley India has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable forward indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cornerstone Strategic and Morgan Stanley

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

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.