Correlation Between Morgan Stanley and Simt Tax-managed

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

By analyzing existing cross correlation between Morgan Stanley Emerging and Simt Tax Managed Large, you can compare the effects of market volatilities on Morgan Stanley and Simt Tax-managed 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 Simt Tax-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Simt Tax-managed.

Diversification Opportunities for Morgan Stanley and Simt Tax-managed

-0.6

Correlation Coefficient

Morgan Stanley  Simt Tax-managed

Excellent diversification

The 3 months correlation between Morgan and SIMT is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Emerging and Simt Tax Managed Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed 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 Emerging are associated (or correlated) with Simt Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Simt Tax-managed go up and down completely randomly.

Pair Corralation between Morgan Stanley and Simt Tax-managed

Assuming the 90 days horizon Morgan Stanley Emerging is expected to under-perform the Simt Tax-managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Morgan Stanley Emerging is 1.16 times less risky than Simt Tax-managed. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Simt Tax Managed Large is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,727  in Simt Tax Managed Large on September 5, 2024 and sell it today you would earn a total of  259.00  from holding Simt Tax Managed Large or generate 6.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Morgan Stanley Emerging  vs.  Simt Tax Managed Large

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 fairly strong fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Tax Managed

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Large are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Tax-managed may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Morgan Stanley and Simt Tax-managed

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

The idea behind Morgan Stanley Emerging and Simt Tax Managed Large 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.