Correlation Between Morgan Stanley and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Equinor ASA 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 Equinor ASA 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 Equinor ASA, you can compare the effects of market volatilities on Morgan Stanley and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Equinor ASA.
Diversification Opportunities for Morgan Stanley and Equinor ASA
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Morgan and Equinor is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Equinor ASA go up and down completely randomly.
Pair Corralation between Morgan Stanley and Equinor ASA
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.55 times more return on investment than Equinor ASA. However, Morgan Stanley Direct is 1.81 times less risky than Equinor ASA. It trades about 0.2 of its potential returns per unit of risk. Equinor ASA is currently generating about -0.1 per unit of risk. If you would invest 2,055 in Morgan Stanley Direct on September 19, 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 | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Morgan Stanley Direct vs. Equinor ASA
Performance |
| Timeline |
| Morgan Stanley Direct |
| Equinor ASA |
Morgan Stanley and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Equinor ASA
The main advantage of trading using opposite Morgan Stanley and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| Morgan Stanley vs. Mesa Air Group | Morgan Stanley vs. Air Transport Services | Morgan Stanley vs. SmartStop Self Storage | Morgan Stanley vs. Q2 Holdings |
| Equinor ASA vs. NXP Semiconductors NV | Equinor ASA vs. AGRICULTBK HADR25 YC | Equinor ASA vs. Granite Construction | Equinor ASA vs. Australian Agricultural |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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