Correlation Between Invesco Equally-weighted and Morgan Stanley

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

By analyzing existing cross correlation between Invesco Equally Weighted Sp and Morgan Stanley Institutional, you can compare the effects of market volatilities on Invesco Equally-weighted 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 Invesco Equally-weighted with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Equally-weighted and Morgan Stanley.

Diversification Opportunities for Invesco Equally-weighted and Morgan Stanley

0.26

Correlation Coefficient

Invesco Equally-weighted  Morgan Stanley

Modest diversification

The 3 months correlation between Invesco and Morgan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Equally Weighted Sp and Morgan Stanley Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Insti and Invesco Equally-weighted 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 Invesco Equally Weighted Sp 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 Insti has no effect on the direction of Invesco Equally-weighted i.e., Invesco Equally-weighted and Morgan Stanley go up and down completely randomly.

Pair Corralation between Invesco Equally-weighted and Morgan Stanley

Assuming the 90 days horizon Invesco Equally Weighted Sp is expected to under-perform the Morgan Stanley. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Equally Weighted Sp is 1.02 times less risky than Morgan Stanley. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Morgan Stanley Institutional is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,651  in Morgan Stanley Institutional on December 10, 2024 and sell it today you would earn a total of  91.00  from holding Morgan Stanley Institutional or generate 5.51% return on investment over 90 days.

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

Invesco Equally Weighted Sp  vs.  Morgan Stanley Institutional

Invesco Equally-weighted

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Equally Weighted Sp has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Insti

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Institutional are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco Equally-weighted and Morgan Stanley

The main advantage of trading using opposite Invesco Equally-weighted and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Equally-weighted 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 Invesco Equally Weighted Sp and Morgan Stanley Institutional 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.