Correlation Between Morgan Stanley and Virtu Financial
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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 3.4% |
| Values | Daily Returns |
Morgan Stanley vs. Virtu Financial
Performance |
| Timeline |
| Morgan Stanley |
| Virtu Financial |
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.| Morgan Stanley vs. Micron Technology | Morgan Stanley vs. BC TECHNOLOGY GROUP | Morgan Stanley vs. Kingdee International Software | Morgan Stanley vs. Easy Software AG |
| Virtu Financial vs. Vulcan Materials | Virtu Financial vs. Mitsubishi Materials | Virtu Financial vs. Air Lease | Virtu Financial vs. ALBIS LEASING AG |
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.
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