Correlation Between Morgan Stanley and Shelton Emerging

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

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

Diversification Opportunities for Morgan Stanley and Shelton Emerging

0.63

Correlation Coefficient

Morgan Stanley  Shelton Emerging

Poor diversification

The 3 months correlation between Morgan and Shelton is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Insti and Shelton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Emerging Markets 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 Insti are associated (or correlated) with Shelton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Emerging Markets has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Shelton Emerging go up and down completely randomly.

Pair Corralation between Morgan Stanley and Shelton Emerging

Assuming the 90 days horizon Morgan Stanley Insti is expected to generate 1.07 times more return on investment than Shelton Emerging. However, Morgan Stanley is 1.07 times more volatile than Shelton Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Shelton Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest  2,117  in Morgan Stanley Insti on September 4, 2024 and sell it today you would earn a total of  543.00  from holding Morgan Stanley Insti or generate 25.65% return on investment over 90 days.

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

Morgan Stanley Insti  vs.  Shelton Emerging Markets

Morgan Stanley Insti

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Insti are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Shelton Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Shelton Emerging 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 Shelton Emerging

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

The idea behind Morgan Stanley Insti and Shelton Emerging Markets 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.