Correlation Between Morgan Stanley and Manning Napier

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

Diversification Opportunities for Morgan Stanley and Manning Napier

-0.15

Correlation Coefficient

Morgan Stanley  Manning Napier

Good diversification

The 3 months correlation between Morgan and Manning is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Manning Napier Pro Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Pro 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 Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Pro has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Manning Napier go up and down completely randomly.

Pair Corralation between Morgan Stanley and Manning Napier

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Manning Napier. In addition to that, Morgan Stanley is 1.41 times more volatile than Manning Napier Pro Blend. It trades about -0.15 of its total potential returns per unit of risk. Manning Napier Pro Blend is currently generating about -0.08 per unit of volatility. If you would invest  2,620  in Manning Napier Pro Blend on December 4, 2024 and sell it today you would lose (28.00) from holding Manning Napier Pro Blend or give up 1.07% of portfolio value over 90 days.

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

Morgan Stanley Direct  vs.  Manning Napier Pro Blend

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.

Manning Napier Pro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manning Napier Pro Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Manning Napier

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

The idea behind Morgan Stanley Direct and Manning Napier Pro Blend 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.