Correlation Between Morgan Stanley and Cohen
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Cohen 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 Cohen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Cohen Company, you can compare the effects of market volatilities on Morgan Stanley and Cohen 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 Cohen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Cohen.
Diversification Opportunities for Morgan Stanley and Cohen
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Cohen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Cohen Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Company 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 Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Company has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Cohen go up and down completely randomly.
Pair Corralation between Morgan Stanley and Cohen
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 2.27 times less return on investment than Cohen. But when comparing it to its historical volatility, Morgan Stanley is 1.73 times less risky than Cohen. It trades about 0.17 of its potential returns per unit of risk. Cohen Company is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 814.00 in Cohen Company on August 29, 2024 and sell it today you would earn a total of 201.00 from holding Cohen Company or generate 24.69% 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. Cohen Company
Performance |
| Timeline |
| Morgan Stanley |
| Cohen Company |
Morgan Stanley and Cohen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Cohen
The main advantage of trading using opposite Morgan Stanley and Cohen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Cohen 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 Cohen will offset losses from the drop in Cohen's long position.| Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Riot Blockchain | Morgan Stanley vs. Marathon Digital Holdings | Morgan Stanley vs. Applied Blockchain |
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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