Correlation Between Morgan Stanley and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Putnam Global 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 Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Multi and Putnam Global Technology, you can compare the effects of market volatilities on Morgan Stanley and Putnam Global 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 Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Putnam Global.
Diversification Opportunities for Morgan Stanley and Putnam Global
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Putnam is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Multi and Putnam Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Technology 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 Multi are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Technology has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Putnam Global go up and down completely randomly.
Pair Corralation between Morgan Stanley and Putnam Global
Assuming the 90 days horizon Morgan Stanley Multi is expected to generate 1.4 times more return on investment than Putnam Global. However, Morgan Stanley is 1.4 times more volatile than Putnam Global Technology. It trades about 0.11 of its potential returns per unit of risk. Putnam Global Technology is currently generating about 0.1 per unit of risk. If you would invest 2,003 in Morgan Stanley Multi on September 11, 2024 and sell it today you would earn a total of 2,107 from holding Morgan Stanley Multi or generate 105.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Morgan Stanley Multi vs. Putnam Global Technology
Performance |
Timeline |
Morgan Stanley Multi |
Putnam Global Technology |
Morgan Stanley and Putnam Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Putnam Global
The main advantage of trading using opposite Morgan Stanley and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Putnam Global 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 Putnam Global will offset losses from the drop in Putnam Global's long position.Morgan Stanley vs. T Rowe Price | Morgan Stanley vs. Aqr Large Cap | Morgan Stanley vs. Morningstar Unconstrained Allocation | Morgan Stanley vs. T Rowe Price |
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Check out your portfolio center.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.
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