Correlation Between Morgan Stanley and Africa Fund

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

By analyzing existing cross correlation between Morgan Stanley India and Africa Fund Africa, you can compare the effects of market volatilities on Morgan Stanley and Africa 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 Africa Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Africa Fund.

Diversification Opportunities for Morgan Stanley and Africa Fund

0.07

Correlation Coefficient

Morgan Stanley  Africa Fund

Significant diversification

The 3 months correlation between Morgan and Africa is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley India and Africa Fund Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Fund Africa 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 India are associated (or correlated) with Africa Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Fund Africa has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Africa Fund go up and down completely randomly.

Pair Corralation between Morgan Stanley and Africa Fund

Considering the 90-day investment horizon Morgan Stanley India is expected to generate 0.57 times more return on investment than Africa Fund. However, Morgan Stanley India is 1.75 times less risky than Africa Fund. It trades about 0.23 of its potential returns per unit of risk. Africa Fund Africa is currently generating about 0.04 per unit of risk. If you would invest  1,871  in Morgan Stanley India on January 30, 2024 and sell it today you would earn a total of  471.00  from holding Morgan Stanley India or generate 25.17% return on investment over 90 days.

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

Morgan Stanley India  vs.  Africa Fund Africa

Morgan Stanley India

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley India are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable forward indicators, Morgan Stanley is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Africa Fund Africa

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Africa Fund Africa are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Africa 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 Africa Fund

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

The idea behind Morgan Stanley India and Africa Fund Africa 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .