Correlation Between Associated Capital and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Associated Capital 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 Associated Capital and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Morgan Stanley, you can compare the effects of market volatilities on Associated Capital 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 Associated Capital with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Morgan Stanley.
Diversification Opportunities for Associated Capital and Morgan Stanley
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and Morgan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Associated Capital 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 Associated Capital Group 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 has no effect on the direction of Associated Capital i.e., Associated Capital and Morgan Stanley go up and down completely randomly.
Pair Corralation between Associated Capital and Morgan Stanley
Allowing for the 90-day total investment horizon Associated Capital Group is expected to under-perform the Morgan Stanley. But the stock apears to be less risky and, when comparing its historical volatility, Associated Capital Group is 1.05 times less risky than Morgan Stanley. The stock trades about -0.1 of its potential returns per unit of risk. The Morgan Stanley is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 12,858 in Morgan Stanley on October 8, 2024 and sell it today you would lose (264.00) from holding Morgan Stanley or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Morgan Stanley
Performance |
| Timeline |
| Associated Capital |
| Morgan Stanley |
Associated Capital and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Morgan Stanley
The main advantage of trading using opposite Associated Capital and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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