Correlation Between Morgan Stanley and Oil Equipment
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Oil Equipment 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 Oil Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Government and Oil Equipment Services, you can compare the effects of market volatilities on Morgan Stanley and Oil Equipment 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 Oil Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Oil Equipment.
Diversification Opportunities for Morgan Stanley and Oil Equipment
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and Oil is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Government and Oil Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Equipment Services 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 Government are associated (or correlated) with Oil Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Equipment Services has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Oil Equipment go up and down completely randomly.
Pair Corralation between Morgan Stanley and Oil Equipment
Assuming the 90 days horizon Morgan Stanley is expected to generate 3.3 times less return on investment than Oil Equipment. But when comparing it to its historical volatility, Morgan Stanley Government is 3.98 times less risky than Oil Equipment. It trades about 0.03 of its potential returns per unit of risk. Oil Equipment Services is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,744 in Oil Equipment Services on August 30, 2024 and sell it today you would earn a total of 731.00 from holding Oil Equipment Services or generate 9.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Morgan Stanley Government vs. Oil Equipment Services
Performance |
| Timeline |
| Morgan Stanley Government |
| Oil Equipment Services |
Morgan Stanley and Oil Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Oil Equipment
The main advantage of trading using opposite Morgan Stanley and Oil Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Oil Equipment 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 Oil Equipment will offset losses from the drop in Oil Equipment's long position.| Morgan Stanley vs. Eip Growth And | Morgan Stanley vs. Touchstone Small Cap | Morgan Stanley vs. Qs Small Capitalization | Morgan Stanley vs. Ab Centrated Growth |
| Oil Equipment vs. T Rowe Price | Oil Equipment vs. T Rowe Price | Oil Equipment vs. Baird Strategic Municipal | Oil Equipment vs. Gamco Global Telecommunications |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |