Correlation Between Prudential Jennison and Morgan Stanley

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

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

Diversification Opportunities for Prudential Jennison and Morgan Stanley

0.79

Correlation Coefficient

Prudential Jennison  Morgan Stanley

Poor diversification

The 3 months correlation between Prudential and Morgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Small 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 Prudential Jennison 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 Prudential Jennison Small 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 Prudential Jennison i.e., Prudential Jennison and Morgan Stanley go up and down completely randomly.

Pair Corralation between Prudential Jennison and Morgan Stanley

Assuming the 90 days horizon Prudential Jennison Small is expected to generate 2.3 times more return on investment than Morgan Stanley. However, Prudential Jennison is 2.3 times more volatile than Morgan Stanley Emerging. It trades about 0.13 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.11 per unit of risk. If you would invest  1,890  in Prudential Jennison Small on May 4, 2025 and sell it today you would earn a total of  144.00  from holding Prudential Jennison Small or generate 7.62% return on investment over 90 days.

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

Prudential Jennison Small  vs.  Morgan Stanley Emerging

Prudential Jennison Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Jennison may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Morgan Stanley Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Emerging are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Prudential Jennison and Morgan Stanley

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

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.