Correlation Between Morgan Stanley and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Sterling Capital 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 Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Institutional and Sterling Capital Stratton, you can compare the effects of market volatilities on Morgan Stanley and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Sterling Capital.
Diversification Opportunities for Morgan Stanley and Sterling Capital
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Morgan and STERLING is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Institutional and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Institutional are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Sterling Capital go up and down completely randomly.
Pair Corralation between Morgan Stanley and Sterling Capital
Assuming the 90 days horizon Morgan Stanley Institutional is expected to generate 0.94 times more return on investment than Sterling Capital. However, Morgan Stanley Institutional is 1.06 times less risky than Sterling Capital. It trades about 0.05 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.04 per unit of risk. If you would invest 804.00 in Morgan Stanley Institutional on August 29, 2024 and sell it today you would earn a total of 205.00 from holding Morgan Stanley Institutional or generate 25.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Morgan Stanley Institutional vs. Sterling Capital Stratton
Performance |
| Timeline |
| Morgan Stanley Insti |
| Sterling Capital Stratton |
Morgan Stanley and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Sterling Capital
The main advantage of trading using opposite Morgan Stanley and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Morgan Stanley vs. Franklin Natural Resources | Morgan Stanley vs. HUMANA INC | Morgan Stanley vs. Aquagold International | Morgan Stanley vs. Barloworld Ltd ADR |
| Sterling Capital vs. Franklin Natural Resources | Sterling Capital vs. HUMANA INC | Sterling Capital vs. Aquagold International | Sterling Capital vs. Barloworld Ltd ADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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