Correlation Between Morgan Stanley and VanEck Vectors

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and VanEck Vectors 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 VanEck Vectors 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 VanEck Vectors UCITS, you can compare the effects of market volatilities on Morgan Stanley and VanEck Vectors 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 VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and VanEck Vectors.

Diversification Opportunities for Morgan Stanley and VanEck Vectors

0.88

Correlation Coefficient

Morgan Stanley  VanEck Vectors

Very poor diversification

The 3 months correlation between Morgan and VanEck is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and VanEck Vectors UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors UCITS 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 VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors UCITS has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and VanEck Vectors go up and down completely randomly.

Pair Corralation between Morgan Stanley and VanEck Vectors

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.02 times less return on investment than VanEck Vectors. In addition to that, Morgan Stanley is 1.98 times more volatile than VanEck Vectors UCITS. It trades about 0.14 of its total potential returns per unit of risk. VanEck Vectors UCITS is currently generating about 0.29 per unit of volatility. If you would invest  10,850  in VanEck Vectors UCITS on September 18, 2024 and sell it today you would earn a total of  983.00  from holding VanEck Vectors UCITS or generate 9.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Morgan Stanley Direct  vs.  VanEck Vectors UCITS

Morgan Stanley Direct

Risk-Adjusted Performance

11 of 100

Good

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

VanEck Vectors UCITS

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors UCITS are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VanEck Vectors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Morgan Stanley and VanEck Vectors

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

The idea behind Morgan Stanley Direct and VanEck Vectors UCITS 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.