Correlation Between Morgan Stanley and Assured Guaranty
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Assured Guaranty 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 Assured Guaranty 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 Assured Guaranty, you can compare the effects of market volatilities on Morgan Stanley and Assured Guaranty 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 Assured Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Assured Guaranty.
Diversification Opportunities for Morgan Stanley and Assured Guaranty
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Assured is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty 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 Assured Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assured Guaranty has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Assured Guaranty go up and down completely randomly.
Pair Corralation between Morgan Stanley and Assured Guaranty
Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Assured Guaranty. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 2.59 times less risky than Assured Guaranty. The stock trades about -0.03 of its potential returns per unit of risk. The Assured Guaranty is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,340 in Assured Guaranty on October 7, 2024 and sell it today you would earn a total of 960.00 from holding Assured Guaranty or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Morgan Stanley Direct vs. Assured Guaranty
Performance |
| Timeline |
| Morgan Stanley Direct |
| Assured Guaranty |
Morgan Stanley and Assured Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Assured Guaranty
The main advantage of trading using opposite Morgan Stanley and Assured Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Assured Guaranty 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 Assured Guaranty will offset losses from the drop in Assured Guaranty's long position.| Morgan Stanley vs. U Power Limited | Morgan Stanley vs. Logan Ridge Finance | Morgan Stanley vs. Adient PLC | Morgan Stanley vs. Cars Inc |
| Assured Guaranty vs. Delta Air Lines | Assured Guaranty vs. FAIR ISAAC | Assured Guaranty vs. ADRIATIC METALS LS 013355 | Assured Guaranty vs. MAGNUM MINING EXP |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |