Correlation Between Morgan Stanley and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Barclays PLC 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 Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Barclays PLC, you can compare the effects of market volatilities on Morgan Stanley and Barclays PLC 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Barclays PLC.
Diversification Opportunities for Morgan Stanley and Barclays PLC
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and Barclays is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Barclays PLC go up and down completely randomly.
Pair Corralation between Morgan Stanley and Barclays PLC
Assuming the 90 days trading horizon Morgan Stanley is expected to generate 1.54 times less return on investment than Barclays PLC. But when comparing it to its historical volatility, Morgan Stanley is 1.7 times less risky than Barclays PLC. It trades about 0.07 of its potential returns per unit of risk. Barclays PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,699 in Barclays PLC on September 19, 2024 and sell it today you would earn a total of 4,681 from holding Barclays PLC or generate 126.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.79% |
| Values | Daily Returns |
Morgan Stanley vs. Barclays PLC
Performance |
| Timeline |
| Morgan Stanley |
| Barclays PLC |
Morgan Stanley and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Barclays PLC
The main advantage of trading using opposite Morgan Stanley and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| Morgan Stanley vs. Spotify Technology SA | Morgan Stanley vs. GX AI TECH | Morgan Stanley vs. Charter Communications | Morgan Stanley vs. Unifique Telecomunicaes SA |
| Barclays PLC vs. HSBC Holdings plc | Barclays PLC vs. Wells Fargo | Barclays PLC vs. BTG Pactual Logstica | Barclays PLC vs. Plano Plano Desenvolvimento |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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