Correlation Between Houlihan Lokey and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Houlihan Lokey 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 Houlihan Lokey and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Houlihan Lokey and Morgan Stanley, you can compare the effects of market volatilities on Houlihan Lokey 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 Houlihan Lokey with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houlihan Lokey and Morgan Stanley.
Diversification Opportunities for Houlihan Lokey and Morgan Stanley
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Houlihan and Morgan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Houlihan Lokey 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 Houlihan Lokey 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 has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and Morgan Stanley go up and down completely randomly.
Pair Corralation between Houlihan Lokey and Morgan Stanley
Considering the 90-day investment horizon Houlihan Lokey is expected to generate 2.17 times more return on investment than Morgan Stanley. However, Houlihan Lokey is 2.17 times more volatile than Morgan Stanley. It trades about 0.23 of its potential returns per unit of risk. Morgan Stanley is currently generating about -0.11 per unit of risk. If you would invest 16,614 in Houlihan Lokey on August 24, 2024 and sell it today you would earn a total of 2,252 from holding Houlihan Lokey or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Houlihan Lokey vs. Morgan Stanley
Performance |
| Timeline |
| Houlihan Lokey |
| Morgan Stanley |
Houlihan Lokey and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Houlihan Lokey and Morgan Stanley
The main advantage of trading using opposite Houlihan Lokey and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Houlihan Lokey 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.| Houlihan Lokey vs. Lazard | Houlihan Lokey vs. PJT Partners | Houlihan Lokey vs. Moelis Co | Houlihan Lokey vs. Piper Sandler Companies |
| Morgan Stanley vs. Bank of America | Morgan Stanley vs. JPMorgan Chase Co | Morgan Stanley vs. Wells Fargo | Morgan Stanley vs. JPMorgan Chase Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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