Correlation Between Morgan Stanley and Horizon Technology
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Horizon Technology 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 Horizon Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Horizon Technology Finance, you can compare the effects of market volatilities on Morgan Stanley and Horizon Technology 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 Horizon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Horizon Technology.
Diversification Opportunities for Morgan Stanley and Horizon Technology
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Morgan and Horizon is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Horizon Technology Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Technology 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 Horizon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Technology has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Horizon Technology go up and down completely randomly.
Pair Corralation between Morgan Stanley and Horizon Technology
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 2.15 times more return on investment than Horizon Technology. However, Morgan Stanley is 2.15 times more volatile than Horizon Technology Finance. It trades about 0.24 of its potential returns per unit of risk. Horizon Technology Finance is currently generating about -0.27 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 1,649 from holding Morgan Stanley or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Horizon Technology Finance
Performance |
| Timeline |
| Morgan Stanley |
| Horizon Technology |
Morgan Stanley and Horizon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Horizon Technology
The main advantage of trading using opposite Morgan Stanley and Horizon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Horizon Technology 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 Horizon Technology will offset losses from the drop in Horizon Technology'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 |
| Horizon Technology vs. Gladstone Capital | Horizon Technology vs. Gladstone Investment | Horizon Technology vs. Prospect Capital | Horizon Technology vs. Stellus Capital Investment |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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