Correlation Between Morgan Stanley and Allan Gray

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

By analyzing existing cross correlation between Morgan Stanley Direct and Allan Gray Tax free, you can compare the effects of market volatilities on Morgan Stanley and Allan Gray 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 Allan Gray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Allan Gray.

Diversification Opportunities for Morgan Stanley and Allan Gray

-0.17

Correlation Coefficient

Morgan Stanley  Allan Gray

Good diversification

The 3 months correlation between Morgan and Allan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Allan Gray Tax free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allan Gray Tax 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 Direct are associated (or correlated) with Allan Gray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allan Gray Tax has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Allan Gray go up and down completely randomly.

Pair Corralation between Morgan Stanley and Allan Gray

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Allan Gray. In addition to that, Morgan Stanley is 2.3 times more volatile than Allan Gray Tax free. It trades about -0.03 of its total potential returns per unit of risk. Allan Gray Tax free is currently generating about 0.06 per unit of volatility. If you would invest  1,713  in Allan Gray Tax free on December 4, 2024 and sell it today you would earn a total of  26.00  from holding Allan Gray Tax free or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Morgan Stanley Direct  vs.  Allan Gray Tax free

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Allan Gray Tax

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allan Gray Tax free are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, Allan Gray is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Allan Gray

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

The idea behind Morgan Stanley Direct and Allan Gray Tax free 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.