Correlation Between Financial and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Financial 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 Financial and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Morgan Stanley China, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Morgan Stanley.
Diversification Opportunities for Financial and Morgan Stanley
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Financial and Morgan is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Morgan Stanley China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley China and Financial 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 Financial 15 Split 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 China has no effect on the direction of Financial i.e., Financial and Morgan Stanley go up and down completely randomly.
Pair Corralation between Financial and Morgan Stanley
Assuming the 90 days horizon Financial 15 Split is expected to generate 2.61 times more return on investment than Morgan Stanley. However, Financial is 2.61 times more volatile than Morgan Stanley China. It trades about 0.12 of its potential returns per unit of risk. Morgan Stanley China is currently generating about 0.01 per unit of risk. If you would invest 633.00 in Financial 15 Split on October 20, 2024 and sell it today you would earn a total of 32.00 from holding Financial 15 Split or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Morgan Stanley China
Performance |
| Timeline |
| Financial 15 Split |
| Morgan Stanley China |
Financial and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Morgan Stanley
The main advantage of trading using opposite Financial and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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.| Financial vs. SEI Investments | Financial vs. Oxford Lane Capital | Financial vs. Blackstone Group | Financial vs. North American Financial |
| Morgan Stanley vs. Central Europe Russia | Morgan Stanley vs. Morgan Stanley India | Morgan Stanley vs. Ashmore Group Plc | Morgan Stanley vs. Nuveen Missouri Quality |
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 Stocks Directory module to find actively traded stocks across global markets.
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