Correlation Between Morgan Stanley and Capital One
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Capital One 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 Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Capital One Financial, you can compare the effects of market volatilities on Morgan Stanley and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Capital One.
Diversification Opportunities for Morgan Stanley and Capital One
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and Capital is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Capital One go up and down completely randomly.
Pair Corralation between Morgan Stanley and Capital One
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 2.15 times more return on investment than Capital One. However, Morgan Stanley is 2.15 times more volatile than Capital One Financial. It trades about 0.22 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.02 per unit of risk. If you would invest 11,820 in Morgan Stanley on August 27, 2024 and sell it today you would earn a total of 1,546 from holding Morgan Stanley or generate 13.08% 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. Capital One Financial
Performance |
| Timeline |
| Morgan Stanley |
| Capital One Financial |
Morgan Stanley and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Capital One
The main advantage of trading using opposite Morgan Stanley and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Morgan Stanley vs. Visa Class A | Morgan Stanley vs. Diamond Hill Investment | Morgan Stanley vs. Distoken Acquisition | Morgan Stanley vs. AllianceBernstein Holding LP |
| Capital One vs. Capital One Financial | Capital One vs. Capital One Financial | Capital One vs. JPMorgan Chase Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |