Correlation Between Ab International and Morgan Stanley

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

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

Diversification Opportunities for Ab International and Morgan Stanley

0.64

Correlation Coefficient

Ab International  Morgan Stanley

Poor diversification

The 3 months correlation between AWPYX and Morgan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ab International Growth and Morgan Stanley Pathway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Pathway and Ab International 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 Ab International Growth 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 Pathway has no effect on the direction of Ab International i.e., Ab International and Morgan Stanley go up and down completely randomly.

Pair Corralation between Ab International and Morgan Stanley

Assuming the 90 days horizon Ab International Growth is expected to generate 4.32 times more return on investment than Morgan Stanley. However, Ab International is 4.32 times more volatile than Morgan Stanley Pathway. It trades about 0.27 of its potential returns per unit of risk. Morgan Stanley Pathway is currently generating about 0.34 per unit of risk. If you would invest  1,991  in Ab International Growth on April 23, 2025 and sell it today you would earn a total of  224.00  from holding Ab International Growth or generate 11.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Ab International Growth  vs.  Morgan Stanley Pathway

Ab International Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab International Growth are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Morgan Stanley Pathway

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Pathway are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab International and Morgan Stanley

The main advantage of trading using opposite Ab International and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab International 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 Ab International Growth and Morgan Stanley Pathway 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.