Correlation Between Morgan Stanley and Oberweis Emerging

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

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

Diversification Opportunities for Morgan Stanley and Oberweis Emerging

0.79

Correlation Coefficient

Morgan Stanley  Oberweis Emerging

Poor diversification

The 3 months correlation between Morgan and Oberweis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Institutional and Oberweis Emerging Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Emerging Growth 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 Institutional are associated (or correlated) with Oberweis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Emerging Growth has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Oberweis Emerging go up and down completely randomly.

Pair Corralation between Morgan Stanley and Oberweis Emerging

Assuming the 90 days horizon Morgan Stanley Institutional is expected to generate 0.58 times more return on investment than Oberweis Emerging. However, Morgan Stanley Institutional is 1.74 times less risky than Oberweis Emerging. It trades about -0.03 of its potential returns per unit of risk. Oberweis Emerging Growth is currently generating about -0.09 per unit of risk. If you would invest  235.00  in Morgan Stanley Institutional on December 30, 2024 and sell it today you would lose (4.00) from holding Morgan Stanley Institutional or give up 1.7% of portfolio value over 90 days.

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

Morgan Stanley Institutional  vs.  Oberweis Emerging Growth

Morgan Stanley Insti

Risk-Adjusted Performance

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 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.

Oberweis Emerging Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oberweis Emerging Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Morgan Stanley and Oberweis Emerging

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

The idea behind Morgan Stanley Institutional and Oberweis Emerging Growth 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.