Correlation Between Morgan Stanley and LB Foster
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and LB Foster 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 LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and LB Foster, you can compare the effects of market volatilities on Morgan Stanley and LB Foster 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 LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and LB Foster.
Diversification Opportunities for Morgan Stanley and LB Foster
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and FSTR is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster 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 LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and LB Foster go up and down completely randomly.
Pair Corralation between Morgan Stanley and LB Foster
Assuming the 90 days horizon Morgan Stanley is expected to under-perform the LB Foster. But the preferred stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley is 4.37 times less risky than LB Foster. The preferred stock trades about -0.15 of its potential returns per unit of risk. The LB Foster is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 1,911 in LB Foster on September 4, 2024 and sell it today you would earn a total of 1,009 from holding LB Foster or generate 52.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. LB Foster
Performance |
| Timeline |
| Morgan Stanley |
| LB Foster |
Morgan Stanley and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and LB Foster
The main advantage of trading using opposite Morgan Stanley and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.| Morgan Stanley vs. LB Foster | Morgan Stanley vs. Valneva SE ADR | Morgan Stanley vs. Sonida Senior Living | Morgan Stanley vs. Olympic Steel |
| LB Foster vs. Ayala | LB Foster vs. Steel Partners Holdings | LB Foster vs. FTAI Infrastructure | LB Foster vs. Griffon |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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