Correlation Between KKR Co and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both KKR Co 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 KKR Co and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KKR Co LP and Morgan Stanley, you can compare the effects of market volatilities on KKR Co 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 KKR Co with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and Morgan Stanley.
Diversification Opportunities for KKR Co and Morgan Stanley
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KKR and Morgan is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and KKR Co 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 KKR Co LP 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 KKR Co i.e., KKR Co and Morgan Stanley go up and down completely randomly.
Pair Corralation between KKR Co and Morgan Stanley
Assuming the 90 days trading horizon KKR Co LP is expected to generate 1.14 times more return on investment than Morgan Stanley. However, KKR Co is 1.14 times more volatile than Morgan Stanley. It trades about 0.14 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.15 per unit of risk. If you would invest 8,782 in KKR Co LP on August 25, 2024 and sell it today you would earn a total of 6,446 from holding KKR Co LP or generate 73.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KKR Co LP vs. Morgan Stanley
Performance |
| Timeline |
| KKR Co LP |
| Morgan Stanley |
KKR Co and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Co and Morgan Stanley
The main advantage of trading using opposite KKR Co and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Co 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.| KKR Co vs. BJs Restaurants | KKR Co vs. UNIVMUSIC GRPADR050 | KKR Co vs. Materialise NV | KKR Co vs. VULCAN MATERIALS |
| Morgan Stanley vs. TITANIUM TRANSPORTGROUP | Morgan Stanley vs. TEXAS ROADHOUSE | Morgan Stanley vs. Ribbon Communications | Morgan Stanley vs. BROADSTNET LEADL 00025 |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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