Correlation Between Morgan Stanley and Associated Capital
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Associated Capital 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 Associated Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Associated Capital Group, you can compare the effects of market volatilities on Morgan Stanley and Associated Capital 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 Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Associated Capital.
Diversification Opportunities for Morgan Stanley and Associated Capital
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and Associated is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital 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 Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Associated Capital go up and down completely randomly.
Pair Corralation between Morgan Stanley and Associated Capital
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.05 times more return on investment than Associated Capital. However, Morgan Stanley is 1.05 times more volatile than Associated Capital Group. It trades about -0.06 of its potential returns per unit of risk. Associated Capital Group is currently generating about -0.1 per unit of risk. If you would invest 12,858 in Morgan Stanley on October 8, 2024 and sell it today you would lose (264.00) from holding Morgan Stanley or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Associated Capital Group
Performance |
| Timeline |
| Morgan Stanley |
| Associated Capital |
Morgan Stanley and Associated Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Associated Capital
The main advantage of trading using opposite Morgan Stanley and Associated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Associated Capital 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 Associated Capital will offset losses from the drop in Associated Capital's long position.| Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Riot Blockchain | Morgan Stanley vs. Marathon Digital Holdings | Morgan Stanley vs. Applied Digital |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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