Correlation Between Morgan Stanley and Interactive Brokers
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Interactive Brokers 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 Interactive Brokers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Interactive Brokers Group, you can compare the effects of market volatilities on Morgan Stanley and Interactive Brokers 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 Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Interactive Brokers.
Diversification Opportunities for Morgan Stanley and Interactive Brokers
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and Interactive is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers 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 Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Interactive Brokers go up and down completely randomly.
Pair Corralation between Morgan Stanley and Interactive Brokers
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.81 times less return on investment than Interactive Brokers. But when comparing it to its historical volatility, Morgan Stanley is 1.06 times less risky than Interactive Brokers. It trades about 0.07 of its potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,691 in Interactive Brokers Group on August 24, 2024 and sell it today you would earn a total of 11,471 from holding Interactive Brokers Group or generate 149.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Interactive Brokers Group
Performance |
| Timeline |
| Morgan Stanley |
| Interactive Brokers |
Morgan Stanley and Interactive Brokers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Interactive Brokers
The main advantage of trading using opposite Morgan Stanley and Interactive Brokers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Interactive Brokers 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 Interactive Brokers will offset losses from the drop in Interactive Brokers' long position.| Morgan Stanley vs. JPMorgan Chase Co | Morgan Stanley vs. Wells Fargo | Morgan Stanley vs. Citigroup | Morgan Stanley vs. American Express |
| Interactive Brokers vs. SNDL Inc | Interactive Brokers vs. Tianjin Capital Environmental | Interactive Brokers vs. AMCON Distributing | Interactive Brokers vs. Sanyo Special Steel |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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