Correlation Between Vanguard Windsor and Morgan Stanley

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

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

Diversification Opportunities for Vanguard Windsor and Morgan Stanley

0.46

Correlation Coefficient

Vanguard Windsor  Morgan Stanley

Very weak diversification

The 3 months correlation between Vanguard and Morgan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Windsor Fund 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 Vanguard Windsor 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 Vanguard Windsor Fund 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 Vanguard Windsor i.e., Vanguard Windsor and Morgan Stanley go up and down completely randomly.

Pair Corralation between Vanguard Windsor and Morgan Stanley

Assuming the 90 days horizon Vanguard Windsor Fund is expected to under-perform the Morgan Stanley. In addition to that, Vanguard Windsor is 2.25 times more volatile than Morgan Stanley Emerging. It trades about -0.14 of its total potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.06 per unit of volatility. If you would invest  445.00  in Morgan Stanley Emerging on October 22, 2024 and sell it today you would earn a total of  9.00  from holding Morgan Stanley Emerging or generate 2.02% return on investment over 90 days.

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

Vanguard Windsor Fund  vs.  Morgan Stanley Emerging

Vanguard Windsor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Windsor Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and 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 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 Vanguard Windsor and Morgan Stanley

The main advantage of trading using opposite Vanguard Windsor and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Windsor 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 Vanguard Windsor Fund 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.