Correlation Between Morgan Stanley and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Macquarie Group 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 Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Macquarie Group Ltd, you can compare the effects of market volatilities on Morgan Stanley and Macquarie Group 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 Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Macquarie Group.
Diversification Opportunities for Morgan Stanley and Macquarie Group
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Morgan and Macquarie is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Macquarie Group go up and down completely randomly.
Pair Corralation between Morgan Stanley and Macquarie Group
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.61 times more return on investment than Macquarie Group. However, Morgan Stanley is 1.61 times more volatile than Macquarie Group Ltd. It trades about 0.21 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.06 per unit of risk. If you would invest 10,140 in Morgan Stanley on August 28, 2024 and sell it today you would earn a total of 3,226 from holding Morgan Stanley or generate 31.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Macquarie Group Ltd
Performance |
| Timeline |
| Morgan Stanley |
| Macquarie Group |
Morgan Stanley and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Macquarie Group
The main advantage of trading using opposite Morgan Stanley and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group'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 |
| Macquarie Group vs. Morgan Stanley | Macquarie Group vs. Goldman Sachs Group | Macquarie Group vs. Charles Schwab Corp | Macquarie Group vs. Interactive Brokers Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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