Correlation Between Morgan Stanley and Moodys
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Moodys 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 Morgan Stanley and Moodys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Moodys, you can compare the effects of market volatilities on Morgan Stanley and Moodys 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 Morgan Stanley with a short position of Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Moodys.
Diversification Opportunities for Morgan Stanley and Moodys
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and Moodys is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys and Morgan Stanley 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 Morgan Stanley are associated (or correlated) with Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Moodys go up and down completely randomly.
Pair Corralation between Morgan Stanley and Moodys
Assuming the 90 days horizon Morgan Stanley is expected to under-perform the Moodys. In addition to that, Morgan Stanley is 1.16 times more volatile than Moodys. It trades about -0.12 of its total potential returns per unit of risk. Moodys is currently generating about 0.04 per unit of volatility. If you would invest 46,771 in Moodys on December 1, 2024 and sell it today you would earn a total of 539.00 from holding Moodys or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Moodys
Performance |
| Timeline |
| Morgan Stanley |
| Moodys |
Morgan Stanley and Moodys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Moodys
The main advantage of trading using opposite Morgan Stanley and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Moodys 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 Moodys will offset losses from the drop in Moodys' long position.| Morgan Stanley vs. AEON STORES | Morgan Stanley vs. Broadcom | Morgan Stanley vs. BURLINGTON STORES | Morgan Stanley vs. Kaufman Broad SA |
| Moodys vs. EMPEROR ENT HOTEL | Moodys vs. MIRAMAR HOTEL INV | Moodys vs. INTERCONT HOTELS | Moodys vs. Nomad Foods |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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