Correlation Between Morgan Stanley and Growth Fund

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

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

Diversification Opportunities for Morgan Stanley and Growth Fund

0.43

Correlation Coefficient

Morgan Stanley  Growth Fund

Very weak diversification

The 3 months correlation between Morgan and Growth is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Multi and Growth Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund C 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 Multi are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund C has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Growth Fund go up and down completely randomly.

Pair Corralation between Morgan Stanley and Growth Fund

Assuming the 90 days horizon Morgan Stanley Multi is expected to generate 1.26 times more return on investment than Growth Fund. However, Morgan Stanley is 1.26 times more volatile than Growth Fund C. It trades about -0.04 of its potential returns per unit of risk. Growth Fund C is currently generating about -0.13 per unit of risk. If you would invest  4,012  in Morgan Stanley Multi on December 3, 2024 and sell it today you would lose (239.00) from holding Morgan Stanley Multi or give up 5.96% of portfolio value over 90 days.

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

Morgan Stanley Multi  vs.  Growth Fund C

Morgan Stanley Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Multi 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.

Growth Fund C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Fund C has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Morgan Stanley and Growth Fund

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

The idea behind Morgan Stanley Multi and Growth Fund C 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.