Correlation Between Morgan Stanley and Grant Park

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

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

Diversification Opportunities for Morgan Stanley and Grant Park

0.76

Correlation Coefficient

Morgan Stanley  Grant Park

Poor diversification

The 3 months correlation between Morgan and Grant is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley India and Grant Park Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grant Park Multi 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 India are associated (or correlated) with Grant Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grant Park Multi has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Grant Park go up and down completely randomly.

Pair Corralation between Morgan Stanley and Grant Park

Considering the 90-day investment horizon Morgan Stanley India is expected to generate 1.6 times more return on investment than Grant Park. However, Morgan Stanley is 1.6 times more volatile than Grant Park Multi. It trades about 0.06 of its potential returns per unit of risk. Grant Park Multi is currently generating about -0.02 per unit of risk. If you would invest  2,428  in Morgan Stanley India on September 26, 2024 and sell it today you would earn a total of  141.00  from holding Morgan Stanley India or generate 5.81% return on investment over 90 days.

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

Morgan Stanley India  vs.  Grant Park Multi

Morgan Stanley India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley India has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Grant Park Multi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Morgan Stanley and Grant Park

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

The idea behind Morgan Stanley India and Grant Park Multi 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.