Correlation Between Morgan Stanley and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Banco Santander 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 Banco Santander 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 Banco Santander SA, you can compare the effects of market volatilities on Morgan Stanley and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Banco Santander.
Diversification Opportunities for Morgan Stanley and Banco Santander
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Morgan and Banco is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Banco Santander go up and down completely randomly.
Pair Corralation between Morgan Stanley and Banco Santander
Given the investment horizon of 90 days Morgan Stanley is expected to generate 4.71 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.36 times less risky than Banco Santander. It trades about 0.03 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,702 in Banco Santander SA on December 4, 2024 and sell it today you would earn a total of 2,035 from holding Banco Santander SA or generate 119.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 56.62% |
| Values | Daily Returns |
Morgan Stanley Direct vs. Banco Santander SA
Performance |
| Timeline |
| Morgan Stanley Direct |
| Banco Santander SA |
Morgan Stanley and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Banco Santander
The main advantage of trading using opposite Morgan Stanley and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| Morgan Stanley vs. WPP PLC ADR | Morgan Stanley vs. Townsquare Media | Morgan Stanley vs. CenterPoint Energy | Morgan Stanley vs. ZW Data Action |
| Banco Santander vs. Broadridge Financial Solutions, | Banco Santander vs. METISA Metalrgica Timboense | Banco Santander vs. Mitsubishi UFJ Financial | Banco Santander vs. The Hartford Financial |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |