Correlation Between Morgan Stanley and Federated Fund

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Federated Fund 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 Federated Fund 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 Federated Fund For, you can compare the effects of market volatilities on Morgan Stanley and Federated Fund 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 Federated Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Federated Fund.

Diversification Opportunities for Morgan Stanley and Federated Fund

0.94

Correlation Coefficient

Morgan Stanley  Federated Fund

Almost no diversification

The 3 months correlation between Morgan and Federated is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Emerging and Federated Fund For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Fund For 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 Federated Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Fund For has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Federated Fund go up and down completely randomly.

Pair Corralation between Morgan Stanley and Federated Fund

Assuming the 90 days horizon Morgan Stanley Emerging is expected to under-perform the Federated Fund. In addition to that, Morgan Stanley is 1.65 times more volatile than Federated Fund For. It trades about -0.13 of its total potential returns per unit of risk. Federated Fund For is currently generating about -0.07 per unit of volatility. If you would invest  633.00  in Federated Fund For on September 3, 2024 and sell it today you would lose (9.00) from holding Federated Fund For or give up 1.42% of portfolio value over 90 days.

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

Morgan Stanley Emerging  vs.  Federated Fund For

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.

Federated Fund For

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Fund For has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Federated Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Federated Fund

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

The idea behind Morgan Stanley Emerging and Federated Fund For 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.