Correlation Between CullenFrost Bankers and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both CullenFrost Bankers 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 CullenFrost Bankers and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CullenFrost Bankers and Morgan Stanley, you can compare the effects of market volatilities on CullenFrost Bankers 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 CullenFrost Bankers with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of CullenFrost Bankers and Morgan Stanley.
Diversification Opportunities for CullenFrost Bankers and Morgan Stanley
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CullenFrost and Morgan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CullenFrost Bankers and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and CullenFrost Bankers 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 CullenFrost Bankers 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 CullenFrost Bankers i.e., CullenFrost Bankers and Morgan Stanley go up and down completely randomly.
Pair Corralation between CullenFrost Bankers and Morgan Stanley
Assuming the 90 days trading horizon CullenFrost Bankers is expected to generate 2.69 times more return on investment than Morgan Stanley. However, CullenFrost Bankers is 2.69 times more volatile than Morgan Stanley. It trades about 0.02 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.06 per unit of risk. If you would invest 1,735 in CullenFrost Bankers on August 30, 2024 and sell it today you would earn a total of 229.00 from holding CullenFrost Bankers or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CullenFrost Bankers vs. Morgan Stanley
Performance |
| Timeline |
| CullenFrost Bankers |
| Morgan Stanley |
CullenFrost Bankers and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CullenFrost Bankers and Morgan Stanley
The main advantage of trading using opposite CullenFrost Bankers and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CullenFrost Bankers 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.| CullenFrost Bankers vs. Truist Financial | CullenFrost Bankers vs. Citizens Financial Group | CullenFrost Bankers vs. Bank of America | CullenFrost Bankers vs. US Bancorp |
| Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. KeyCorp | Morgan Stanley vs. Bank of America |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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