Correlation Between American Express and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Morgan Stanley Counterpoint, you can compare the effects of market volatilities on American Express 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 American Express with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Morgan Stanley.
Diversification Opportunities for American Express and Morgan Stanley
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Morgan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Morgan Stanley Counterpoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Count and American Express 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 American Express 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 Count has no effect on the direction of American Express i.e., American Express and Morgan Stanley go up and down completely randomly.
Pair Corralation between American Express and Morgan Stanley
Considering the 90-day investment horizon American Express is expected to generate 1.04 times more return on investment than Morgan Stanley. However, American Express is 1.04 times more volatile than Morgan Stanley Counterpoint. It trades about 0.1 of its potential returns per unit of risk. Morgan Stanley Counterpoint is currently generating about 0.07 per unit of risk. If you would invest 15,318 in American Express on September 2, 2024 and sell it today you would earn a total of 15,150 from holding American Express or generate 98.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.5% |
| Values | Daily Returns |
American Express vs. Morgan Stanley Counterpoint
Performance |
| Timeline |
| American Express |
| Morgan Stanley Count |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Morgan Stanley
The main advantage of trading using opposite American Express and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Morgan Stanley vs. Virtus Real Estate | Morgan Stanley vs. Guggenheim Risk Managed | Morgan Stanley vs. Fidelity Real Estate | Morgan Stanley vs. Pender Real Estate |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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