Correlation Between Interactive Brokers and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Interactive Brokers 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 Interactive Brokers and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interactive Brokers Group and Morgan Stanley, you can compare the effects of market volatilities on Interactive Brokers 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 Interactive Brokers with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interactive Brokers and Morgan Stanley.
Diversification Opportunities for Interactive Brokers and Morgan Stanley
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Interactive and Morgan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Brokers Group and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Interactive Brokers 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 Interactive Brokers Group 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 Interactive Brokers i.e., Interactive Brokers and Morgan Stanley go up and down completely randomly.
Pair Corralation between Interactive Brokers and Morgan Stanley
Given the investment horizon of 90 days Interactive Brokers Group is expected to generate 2.77 times more return on investment than Morgan Stanley. However, Interactive Brokers is 2.77 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 0.07 per unit of risk. If you would invest 8,832 in Interactive Brokers Group on August 28, 2024 and sell it today you would earn a total of 10,266 from holding Interactive Brokers Group or generate 116.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interactive Brokers Group vs. Morgan Stanley
Performance |
| Timeline |
| Interactive Brokers |
| Morgan Stanley |
Interactive Brokers and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interactive Brokers and Morgan Stanley
The main advantage of trading using opposite Interactive Brokers and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interactive Brokers 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.| Interactive Brokers vs. Capital Clean Energy | Interactive Brokers vs. Sonida Senior Living | Interactive Brokers vs. HUTCHMED DRC | Interactive Brokers vs. Radcom |
| Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. The Charles Schwab | Morgan Stanley vs. Morgan Stanley |
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 CEOs Directory module to screen CEOs from public companies around the world.
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