Correlation Between Air Transport and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Morgan Stanley Direct, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Morgan Stanley.
Diversification Opportunities for Air Transport and Morgan Stanley
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Morgan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct and Air Transport 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 Air Transport Services 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 Direct has no effect on the direction of Air Transport i.e., Air Transport and Morgan Stanley go up and down completely randomly.
Pair Corralation between Air Transport and Morgan Stanley
Given the investment horizon of 90 days Air Transport Services is expected to under-perform the Morgan Stanley. But the stock apears to be less risky and, when comparing its historical volatility, Air Transport Services is 2.07 times less risky than Morgan Stanley. The stock trades about -0.03 of its potential returns per unit of risk. The Morgan Stanley Direct is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,055 in Morgan Stanley Direct on September 19, 2024 and sell it today you would earn a total of 83.00 from holding Morgan Stanley Direct or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Morgan Stanley Direct
Performance |
| Timeline |
| Air Transport Services |
| Morgan Stanley Direct |
Air Transport and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Morgan Stanley
The main advantage of trading using opposite Air Transport and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| Morgan Stanley vs. Mesa Air Group | Morgan Stanley vs. Air Transport Services | Morgan Stanley vs. SmartStop Self Storage | Morgan Stanley vs. Q2 Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |