Correlation Between Morgan Stanley and IndexIQ Active
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and IndexIQ Active 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 IndexIQ Active 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 IndexIQ Active ETF, you can compare the effects of market volatilities on Morgan Stanley and IndexIQ Active 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 IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and IndexIQ Active.
Diversification Opportunities for Morgan Stanley and IndexIQ Active
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Morgan and IndexIQ is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and IndexIQ Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ Active ETF 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 IndexIQ Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ Active ETF has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and IndexIQ Active go up and down completely randomly.
Pair Corralation between Morgan Stanley and IndexIQ Active
Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the IndexIQ Active. In addition to that, Morgan Stanley is 3.83 times more volatile than IndexIQ Active ETF. It trades about -0.15 of its total potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.12 per unit of volatility. If you would invest 2,145 in IndexIQ Active ETF on December 5, 2024 and sell it today you would earn a total of 12.00 from holding IndexIQ Active ETF or generate 0.56% 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. IndexIQ Active ETF
Performance |
Timeline |
Morgan Stanley Direct |
IndexIQ Active ETF |
Morgan Stanley and IndexIQ Active Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and IndexIQ Active
The main advantage of trading using opposite Morgan Stanley and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, IndexIQ Active 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 IndexIQ Active will offset losses from the drop in IndexIQ Active's long position.Morgan Stanley vs. Harmony Gold Mining | Morgan Stanley vs. RTG Mining | Morgan Stanley vs. Brandywine Realty Trust | Morgan Stanley vs. PepsiCo |
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Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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