Correlation Between Franklin Templeton and Morgan Stanley

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

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

Diversification Opportunities for Franklin Templeton and Morgan Stanley

0.0

Correlation Coefficient

Franklin Templeton  Morgan Stanley

Pay attention - limited upside

The 3 months correlation between Franklin and Morgan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Morgan Stanley ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley ETF and Franklin Templeton 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 Franklin Templeton ETF 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 ETF has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Morgan Stanley go up and down completely randomly.

Pair Corralation between Franklin Templeton and Morgan Stanley

Given the investment horizon of 90 days Franklin Templeton is expected to generate 1.72 times less return on investment than Morgan Stanley. In addition to that, Franklin Templeton is 1.77 times more volatile than Morgan Stanley ETF. It trades about 0.06 of its total potential returns per unit of risk. Morgan Stanley ETF is currently generating about 0.17 per unit of volatility. If you would invest  6,891  in Morgan Stanley ETF on September 13, 2024 and sell it today you would earn a total of  518.00  from holding Morgan Stanley ETF or generate 7.52% return on investment over 90 days.

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

Franklin Templeton ETF  vs.  Morgan Stanley ETF

Franklin Templeton ETF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Morgan Stanley ETF

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley ETF are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Franklin Templeton and Morgan Stanley

The main advantage of trading using opposite Franklin Templeton and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton 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 Franklin Templeton ETF and Morgan Stanley ETF 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.