Correlation Between Morgan Stanley and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and KeyCorp, you can compare the effects of market volatilities on Morgan Stanley and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and KeyCorp.
Diversification Opportunities for Morgan Stanley and KeyCorp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and KeyCorp is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and KeyCorp go up and down completely randomly.
Pair Corralation between Morgan Stanley and KeyCorp
Assuming the 90 days horizon Morgan Stanley is expected to generate 4.31 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Morgan Stanley is 2.77 times less risky than KeyCorp. It trades about 0.09 of its potential returns per unit of risk. KeyCorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,412 in KeyCorp on August 26, 2024 and sell it today you would earn a total of 961.00 from holding KeyCorp or generate 68.06% 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. KeyCorp
Performance |
| Timeline |
| Morgan Stanley |
| KeyCorp |
Morgan Stanley and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and KeyCorp
The main advantage of trading using opposite Morgan Stanley and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. The Goldman Sachs |
| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | KeyCorp vs. Fifth Third 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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