Correlation Between Morgan Stanley and Aim International

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

Diversification Opportunities for Morgan Stanley and Aim International

-0.37

Correlation Coefficient

Morgan Stanley  Aim International

Very good diversification

The 3 months correlation between Morgan and Aim is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Aim International Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim International Mutual 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 Aim International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim International Mutual has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Aim International go up and down completely randomly.

Pair Corralation between Morgan Stanley and Aim International

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Aim International. In addition to that, Morgan Stanley is 1.22 times more volatile than Aim International Mutual. It trades about -0.15 of its total potential returns per unit of risk. Aim International Mutual is currently generating about 0.03 per unit of volatility. If you would invest  3,821  in Aim International Mutual on December 5, 2024 and sell it today you would earn a total of  18.00  from holding Aim International Mutual or generate 0.47% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  Aim International Mutual

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Aim International Mutual

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aim International Mutual has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential 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 Aim International

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

The idea behind Morgan Stanley Direct and Aim International Mutual 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.