Correlation Between Morgan Stanley and SP Global
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and SP Global 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 SP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and SP Global, you can compare the effects of market volatilities on Morgan Stanley and SP Global 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 SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and SP Global.
Diversification Opportunities for Morgan Stanley and SP Global
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and SPGI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global 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 SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and SP Global go up and down completely randomly.
Pair Corralation between Morgan Stanley and SP Global
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 3.46 times more return on investment than SP Global. However, Morgan Stanley is 3.46 times more volatile than SP Global. It trades about 0.2 of its potential returns per unit of risk. SP Global is currently generating about 0.43 per unit of risk. If you would invest 11,700 in Morgan Stanley on August 31, 2024 and sell it today you would earn a total of 1,421 from holding Morgan Stanley or generate 12.15% 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. SP Global
Performance |
| Timeline |
| Morgan Stanley |
| SP Global |
Morgan Stanley and SP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and SP Global
The main advantage of trading using opposite Morgan Stanley and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global'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 |
| SP Global vs. MSCI Inc | SP Global vs. Nasdaq Inc | SP Global vs. Intercontinental Exchange | SP Global vs. CME 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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