Correlation Between Morgan Stanley and Great Elm
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Great Elm 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 Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Great Elm Group, you can compare the effects of market volatilities on Morgan Stanley and Great Elm 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 Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Great Elm.
Diversification Opportunities for Morgan Stanley and Great Elm
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and Great is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Great Elm Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Group 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 Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Group has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Great Elm go up and down completely randomly.
Pair Corralation between Morgan Stanley and Great Elm
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.46 times more return on investment than Great Elm. However, Morgan Stanley is 1.46 times more volatile than Great Elm Group. It trades about 0.24 of its potential returns per unit of risk. Great Elm Group is currently generating about 0.0 per unit of risk. If you would invest 11,735 in Morgan Stanley on August 24, 2024 and sell it today you would earn a total of 1,764 from holding Morgan Stanley or generate 15.03% 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. Great Elm Group
Performance |
| Timeline |
| Morgan Stanley |
| Great Elm Group |
Morgan Stanley and Great Elm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Great Elm
The main advantage of trading using opposite Morgan Stanley and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.| Morgan Stanley vs. JPMorgan Chase Co | Morgan Stanley vs. Wells Fargo | Morgan Stanley vs. Citigroup | Morgan Stanley vs. American Express |
| Great Elm vs. Investcorp Credit Management | Great Elm vs. Monroe Capital Corp | Great Elm vs. Allianzgi Convertible Income | Great Elm vs. John Hancock Income |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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