Correlation Between Kinetics Market and Morgan Stanley

Can any of the company-specific risk be diversified away by investing in both Kinetics Market 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 Market 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 Market Opportunities and Morgan Stanley Institutional, you can compare the effects of market volatilities on Kinetics Market 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 Market with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Morgan Stanley.

Diversification Opportunities for Kinetics Market and Morgan Stanley

-0.64

Correlation Coefficient

Kinetics Market  Morgan Stanley

Excellent diversification

The 3 months correlation between Kinetics and Morgan is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Morgan Stanley Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Insti and Kinetics Market 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 Market Opportunities 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 Insti has no effect on the direction of Kinetics Market i.e., Kinetics Market and Morgan Stanley go up and down completely randomly.

Pair Corralation between Kinetics Market and Morgan Stanley

Assuming the 90 days horizon Kinetics Market Opportunities is expected to under-perform the Morgan Stanley. In addition to that, Kinetics Market is 3.49 times more volatile than Morgan Stanley Institutional. It trades about -0.16 of its total potential returns per unit of risk. Morgan Stanley Institutional is currently generating about -0.24 per unit of volatility. If you would invest  863.00  in Morgan Stanley Institutional on September 21, 2024 and sell it today you would lose (46.00) from holding Morgan Stanley Institutional or give up 5.33% of portfolio value over 90 days.

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

Kinetics Market Opportunities  vs.  Morgan Stanley Institutional

Kinetics Market Oppo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market showed solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley Insti

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Kinetics Market and Morgan Stanley

The main advantage of trading using opposite Kinetics Market and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Market 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 Market Opportunities and Morgan Stanley Institutional 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.