Correlation Between Morgan Stanley and PIMCO Preferred

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

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

Diversification Opportunities for Morgan Stanley and PIMCO Preferred

0.02

Correlation Coefficient

Morgan Stanley  PIMCO Preferred

Significant diversification

The 3 months correlation between Morgan and PIMCO is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Etf and PIMCO Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Preferred 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 Etf are associated (or correlated) with PIMCO Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Preferred And has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and PIMCO Preferred go up and down completely randomly.

Pair Corralation between Morgan Stanley and PIMCO Preferred

Given the investment horizon of 90 days Morgan Stanley Etf is expected to generate 0.26 times more return on investment than PIMCO Preferred. However, Morgan Stanley Etf is 3.84 times less risky than PIMCO Preferred. It trades about 0.25 of its potential returns per unit of risk. PIMCO Preferred And is currently generating about 0.06 per unit of risk. If you would invest  4,526  in Morgan Stanley Etf on October 11, 2024 and sell it today you would earn a total of  542.00  from holding Morgan Stanley Etf or generate 11.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.59%
Values	Daily Returns

Morgan Stanley Etf  vs.  PIMCO Preferred And

Morgan Stanley Etf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Etf are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PIMCO Preferred And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Preferred And has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PIMCO Preferred is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Morgan Stanley and PIMCO Preferred

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

The idea behind Morgan Stanley Etf and PIMCO Preferred 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.