Correlation Between Morgan Stanley and Virtu Financial

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Virtu Financial 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 Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Virtu Financial, you can compare the effects of market volatilities on Morgan Stanley and Virtu Financial 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 Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Virtu Financial.

Diversification Opportunities for Morgan Stanley and Virtu Financial

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Morgan and Virtu is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial 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 Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Virtu Financial go up and down completely randomly.

Pair Corralation between Morgan Stanley and Virtu Financial

Assuming the 90 days trading horizon Morgan Stanley is expected to under-perform the Virtu Financial. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley is 1.14 times less risky than Virtu Financial. The stock trades about -0.3 of its potential returns per unit of risk. The Virtu Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,515  in Virtu Financial on November 28, 2024 and sell it today you would earn a total of  1,805  from holding Virtu Financial or generate 119.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy3.4%
ValuesDaily Returns

Morgan Stanley  vs.  Virtu Financial

 Performance 
       Timeline  
Morgan Stanley 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Virtu Financial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Virtu Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Virtu Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Morgan Stanley and Virtu Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morgan Stanley and Virtu Financial

The main advantage of trading using opposite Morgan Stanley and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Virtu Financial 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 Virtu Financial will offset losses from the drop in Virtu Financial's long position.
The idea behind Morgan Stanley and Virtu Financial 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.
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 Commodity Directory module to find actively traded commodities issued by global exchanges.

Other Complementary Tools

Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals