Correlation Between Morgan Stanley and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Asbury Automotive 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 Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Direct and Asbury Automotive Group, you can compare the effects of market volatilities on Morgan Stanley and Asbury Automotive 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 Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Asbury Automotive.
Diversification Opportunities for Morgan Stanley and Asbury Automotive
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Asbury is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive 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 Direct are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Asbury Automotive go up and down completely randomly.
Pair Corralation between Morgan Stanley and Asbury Automotive
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.72 times more return on investment than Asbury Automotive. However, Morgan Stanley Direct is 1.4 times less risky than Asbury Automotive. It trades about 0.2 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.04 per unit of risk. If you would invest 2,055 in Morgan Stanley Direct on September 18, 2024 and sell it today you would earn a total of 83.00 from holding Morgan Stanley Direct or generate 4.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Morgan Stanley Direct vs. Asbury Automotive Group
Performance |
Timeline |
Morgan Stanley Direct |
Asbury Automotive |
Morgan Stanley and Asbury Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Asbury Automotive
The main advantage of trading using opposite Morgan Stanley and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.Morgan Stanley vs. Equinix | Morgan Stanley vs. Summit Hotel Properties | Morgan Stanley vs. Verde Clean Fuels | Morgan Stanley vs. Nasdaq Inc |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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