Correlation Between Swiss Helvetia and Morgan Stanley

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

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

Diversification Opportunities for Swiss Helvetia and Morgan Stanley

0.92

Correlation Coefficient

Swiss Helvetia  Morgan Stanley

Almost no diversification

The 3 months correlation between Swiss and Morgan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Helvetia Closed and Morgan Stanley Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Emerging and Swiss Helvetia 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 Swiss Helvetia Closed 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 Emerging has no effect on the direction of Swiss Helvetia i.e., Swiss Helvetia and Morgan Stanley go up and down completely randomly.

Pair Corralation between Swiss Helvetia and Morgan Stanley

Considering the 90-day investment horizon Swiss Helvetia is expected to generate 2.16 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Swiss Helvetia Closed is 1.09 times less risky than Morgan Stanley. It trades about 0.02 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Morgan Stanley Emerging on October 7, 2024 and sell it today you would earn a total of  64.00  from holding Morgan Stanley Emerging or generate 16.67% return on investment over 90 days.

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

Swiss Helvetia Closed  vs.  Morgan Stanley Emerging

Swiss Helvetia Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swiss Helvetia Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest uncertain 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.

Morgan Stanley Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Swiss Helvetia and Morgan Stanley

The main advantage of trading using opposite Swiss Helvetia and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Helvetia 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 Swiss Helvetia Closed and Morgan Stanley Emerging 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.