Correlation Between Morgan Stanley and Stifel Financial
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Stifel Financial 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 Stifel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Stifel Financial Corp, you can compare the effects of market volatilities on Morgan Stanley and Stifel Financial 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 Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Stifel Financial.
Diversification Opportunities for Morgan Stanley and Stifel Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Morgan and Stifel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Stifel Financial go up and down completely randomly.
Pair Corralation between Morgan Stanley and Stifel Financial
Assuming the 90 days horizon Morgan Stanley is expected to generate 1.71 times less return on investment than Stifel Financial. But when comparing it to its historical volatility, Morgan Stanley is 1.43 times less risky than Stifel Financial. It trades about 0.03 of its potential returns per unit of risk. Stifel Financial Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,695 in Stifel Financial Corp on August 27, 2024 and sell it today you would earn a total of 277.00 from holding Stifel Financial Corp or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Stifel Financial Corp
Performance |
| Timeline |
| Morgan Stanley |
| Stifel Financial Corp |
Morgan Stanley and Stifel Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Stifel Financial
The main advantage of trading using opposite Morgan Stanley and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial's long position.| Morgan Stanley vs. Eastman Chemical | Morgan Stanley vs. NL Industries | Morgan Stanley vs. Codexis | Morgan Stanley vs. Axalta Coating Systems |
| Stifel Financial vs. Stifel Financial Corp | Stifel Financial vs. Stifel Financial Corp | Stifel Financial vs. Morgan Stanley | Stifel Financial vs. The Charles Schwab |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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