Correlation Between Kinetics Global and Morgan Stanley

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

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

Diversification Opportunities for Kinetics Global and Morgan Stanley

0.61

Correlation Coefficient

Kinetics Global  Morgan Stanley

Poor diversification

The 3 months correlation between Kinetics and Morgan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Morgan Stanley Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Global and Kinetics Global 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 Kinetics Global Fund 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 Global has no effect on the direction of Kinetics Global i.e., Kinetics Global and Morgan Stanley go up and down completely randomly.

Pair Corralation between Kinetics Global and Morgan Stanley

Assuming the 90 days horizon Kinetics Global is expected to generate 1.72 times less return on investment than Morgan Stanley. In addition to that, Kinetics Global is 1.18 times more volatile than Morgan Stanley Global. It trades about 0.03 of its total potential returns per unit of risk. Morgan Stanley Global is currently generating about 0.07 per unit of volatility. If you would invest  1,120  in Morgan Stanley Global on December 30, 2024 and sell it today you would earn a total of  48.00  from holding Morgan Stanley Global or generate 4.29% return on investment over 90 days.

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

Kinetics Global Fund  vs.  Morgan Stanley Global

Kinetics Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Kinetics Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Morgan Stanley Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Global are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Kinetics Global and Morgan Stanley

The main advantage of trading using opposite Kinetics Global and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Global 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 Kinetics Global Fund and Morgan Stanley Global 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 Global Correlations module to find global opportunities by holding instruments from different markets.