Correlation Between Global Concentrated and Morgan Stanley

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

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

Diversification Opportunities for Global Concentrated and Morgan Stanley

0.71

Correlation Coefficient

Global Concentrated  Morgan Stanley

Poor diversification

The 3 months correlation between Global and Morgan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global Centrated Portfolio 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 Global Concentrated 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 Global Centrated Portfolio 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 Global Concentrated i.e., Global Concentrated and Morgan Stanley go up and down completely randomly.

Pair Corralation between Global Concentrated and Morgan Stanley

Assuming the 90 days horizon Global Centrated Portfolio is expected to under-perform the Morgan Stanley. In addition to that, Global Concentrated is 1.45 times more volatile than Morgan Stanley Institutional. It trades about -0.02 of its total potential returns per unit of risk. Morgan Stanley Institutional is currently generating about -0.03 per unit of volatility. If you would invest  235.00  in Morgan Stanley Institutional on December 29, 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	98.39%
Values	Daily Returns

Global Centrated Portfolio  vs.  Morgan Stanley Institutional

Global Centrated Por

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Global Concentrated and Morgan Stanley

The main advantage of trading using opposite Global Concentrated and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Concentrated 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 Global Centrated Portfolio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.