Correlation Between Virtus Kar and Morgan Stanley

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

By analyzing existing cross correlation between Virtus Kar Small Cap and Morgan Stanley Multi, you can compare the effects of market volatilities on Virtus Kar and Morgan Stanley 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 Virtus Kar with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Morgan Stanley.

Diversification Opportunities for Virtus Kar and Morgan Stanley

0.07

Correlation Coefficient

Virtus Kar  Morgan Stanley

Significant diversification

The 3 months correlation between Virtus and Morgan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Morgan Stanley Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Multi and Virtus Kar 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 Virtus Kar Small Cap are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Multi has no effect on the direction of Virtus Kar i.e., Virtus Kar and Morgan Stanley go up and down completely randomly.

Pair Corralation between Virtus Kar and Morgan Stanley

Assuming the 90 days horizon Virtus Kar Small Cap is expected to under-perform the Morgan Stanley. In addition to that, Virtus Kar is 1.39 times more volatile than Morgan Stanley Multi. It trades about -0.38 of its total potential returns per unit of risk. Morgan Stanley Multi is currently generating about -0.21 per unit of volatility. If you would invest  1,596  in Morgan Stanley Multi on October 15, 2024 and sell it today you would lose (131.00) from holding Morgan Stanley Multi or give up 8.21% of portfolio value over 90 days.

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

Virtus Kar Small Cap  vs.  Morgan Stanley Multi

Virtus Kar Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Morgan Stanley Multi

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Multi are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Morgan Stanley showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Kar and Morgan Stanley

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

The idea behind Virtus Kar Small Cap and Morgan Stanley Multi 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.