Correlation Between Morgan Stanley and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Western Acquisition 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 Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Western Acquisition Ventures, you can compare the effects of market volatilities on Morgan Stanley and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Western Acquisition.
Diversification Opportunities for Morgan Stanley and Western Acquisition
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Western is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Western Acquisition go up and down completely randomly.
Pair Corralation between Morgan Stanley and Western Acquisition
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.35 times more return on investment than Western Acquisition. However, Morgan Stanley is 1.35 times more volatile than Western Acquisition Ventures. It trades about 0.22 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about -0.17 per unit of risk. If you would invest 11,820 in Morgan Stanley on August 28, 2024 and sell it today you would earn a total of 1,546 from holding Morgan Stanley or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Western Acquisition Ventures
Performance |
| Timeline |
| Morgan Stanley |
| Western Acquisition |
Morgan Stanley and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Western Acquisition
The main advantage of trading using opposite Morgan Stanley and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition'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 |
| Western Acquisition vs. PowerUp Acquisition Corp | Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International |
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.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |