Correlation Between Highland Global and Morgan Stanley

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

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

Diversification Opportunities for Highland Global and Morgan Stanley

0.68

Correlation Coefficient

Highland Global  Morgan Stanley

Poor diversification

The 3 months correlation between Highland and Morgan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Highland Global Allocation 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 Highland Global 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 Highland Global Allocation 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 Highland Global i.e., Highland Global and Morgan Stanley go up and down completely randomly.

Pair Corralation between Highland Global and Morgan Stanley

Given the investment horizon of 90 days Highland Global Allocation is expected to generate 1.45 times more return on investment than Morgan Stanley. However, Highland Global is 1.45 times more volatile than Morgan Stanley Emerging. It trades about 0.05 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about -0.08 per unit of risk. If you would invest  805.00  in Highland Global Allocation on February 17, 2025 and sell it today you would earn a total of  28.00  from holding Highland Global Allocation or generate 3.48% return on investment over 90 days.

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

Highland Global Allocation  vs.  Morgan Stanley Emerging

Highland Global Allo

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Global Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong essential indicators, Highland Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Morgan Stanley Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic 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 Highland Global and Morgan Stanley

The main advantage of trading using opposite Highland Global and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Global 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 Highland Global Allocation 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.