Correlation Between Morgan Stanley and CullenFrost Bankers
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and CullenFrost Bankers 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 CullenFrost Bankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and CullenFrost Bankers, you can compare the effects of market volatilities on Morgan Stanley and CullenFrost Bankers 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 CullenFrost Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and CullenFrost Bankers.
Diversification Opportunities for Morgan Stanley and CullenFrost Bankers
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Morgan and CullenFrost is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers 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 CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and CullenFrost Bankers go up and down completely randomly.
Pair Corralation between Morgan Stanley and CullenFrost Bankers
Assuming the 90 days horizon Morgan Stanley is expected to generate 1.92 times less return on investment than CullenFrost Bankers. But when comparing it to its historical volatility, Morgan Stanley is 2.01 times less risky than CullenFrost Bankers. It trades about 0.06 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,681 in CullenFrost Bankers on August 29, 2024 and sell it today you would earn a total of 283.00 from holding CullenFrost Bankers or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. CullenFrost Bankers
Performance |
| Timeline |
| Morgan Stanley |
| CullenFrost Bankers |
Morgan Stanley and CullenFrost Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and CullenFrost Bankers
The main advantage of trading using opposite Morgan Stanley and CullenFrost Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, CullenFrost Bankers 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 CullenFrost Bankers will offset losses from the drop in CullenFrost Bankers' long position.| Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. KeyCorp | Morgan Stanley vs. Bank of America |
| CullenFrost Bankers vs. Truist Financial | CullenFrost Bankers vs. Citizens Financial Group | CullenFrost Bankers vs. Bank of America | CullenFrost Bankers vs. US Bancorp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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