Correlation Between Morgan Stanley and Investec
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Investec 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 Investec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Investec Group, you can compare the effects of market volatilities on Morgan Stanley and Investec 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 Investec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Investec.
Diversification Opportunities for Morgan Stanley and Investec
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Investec is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Investec Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Group 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 are associated (or correlated) with Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Group has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Investec go up and down completely randomly.
Pair Corralation between Morgan Stanley and Investec
Assuming the 90 days horizon Morgan Stanley is expected to generate 17.39 times less return on investment than Investec. But when comparing it to its historical volatility, Morgan Stanley is 13.11 times less risky than Investec. It trades about 0.12 of its potential returns per unit of risk. Investec Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,104 in Investec Group on December 11, 2024 and sell it today you would earn a total of 516.00 from holding Investec Group or generate 46.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Investec Group
Performance |
| Timeline |
| Morgan Stanley |
| Investec Group |
Morgan Stanley and Investec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Investec
The main advantage of trading using opposite Morgan Stanley and Investec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Investec 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 Investec will offset losses from the drop in Investec's long position.| Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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