Correlation Between Cohen and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Cohen 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 Cohen and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohen Company and Morgan Stanley, you can compare the effects of market volatilities on Cohen 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 Cohen with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohen and Morgan Stanley.
Diversification Opportunities for Cohen and Morgan Stanley
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cohen and Morgan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Company and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Cohen 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 Cohen Company 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 Cohen i.e., Cohen and Morgan Stanley go up and down completely randomly.
Pair Corralation between Cohen and Morgan Stanley
Given the investment horizon of 90 days Cohen Company is expected to generate 9.39 times more return on investment than Morgan Stanley. However, Cohen is 9.39 times more volatile than Morgan Stanley. It trades about 0.04 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.06 per unit of risk. If you would invest 703.00 in Cohen Company on August 29, 2024 and sell it today you would earn a total of 312.00 from holding Cohen Company or generate 44.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cohen Company vs. Morgan Stanley
Performance |
| Timeline |
| Cohen Company |
| Morgan Stanley |
Cohen and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cohen and Morgan Stanley
The main advantage of trading using opposite Cohen and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohen 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 Cohen Company and Morgan Stanley 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.| Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. Morgan Stanley |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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