Correlation Between Morgan Stanley and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and SWK Holdings 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 SWK Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and SWK Holdings Corp, you can compare the effects of market volatilities on Morgan Stanley and SWK Holdings 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and SWK Holdings.
Diversification Opportunities for Morgan Stanley and SWK Holdings
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Morgan and SWK is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings Corp 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and SWK Holdings go up and down completely randomly.
Pair Corralation between Morgan Stanley and SWK Holdings
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.84 times more return on investment than SWK Holdings. However, Morgan Stanley is 1.84 times more volatile than SWK Holdings Corp. It trades about 0.29 of its potential returns per unit of risk. SWK Holdings Corp is currently generating about -0.12 per unit of risk. If you would invest 10,178 in Morgan Stanley on August 25, 2024 and sell it today you would earn a total of 3,321 from holding Morgan Stanley or generate 32.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. SWK Holdings Corp
Performance |
| Timeline |
| Morgan Stanley |
| SWK Holdings Corp |
Morgan Stanley and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and SWK Holdings
The main advantage of trading using opposite Morgan Stanley and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, SWK Holdings 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 SWK Holdings will offset losses from the drop in SWK Holdings' long position.| Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Riot Blockchain | Morgan Stanley vs. Marathon Digital Holdings | Morgan Stanley vs. Applied Blockchain |
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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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