Correlation Between Morgan Stanley and GrafTech International
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and GrafTech International 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 GrafTech International 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 GrafTech International, you can compare the effects of market volatilities on Morgan Stanley and GrafTech International 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 GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and GrafTech International.
Diversification Opportunities for Morgan Stanley and GrafTech International
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and GrafTech is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and GrafTech International go up and down completely randomly.
Pair Corralation between Morgan Stanley and GrafTech International
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.2 times more return on investment than GrafTech International. However, Morgan Stanley Direct is 4.94 times less risky than GrafTech International. It trades about 0.01 of its potential returns per unit of risk. GrafTech International is currently generating about -0.21 per unit of risk. If you would invest 2,080 in Morgan Stanley Direct on September 24, 2024 and sell it today you would earn a total of 4.00 from holding Morgan Stanley Direct or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Morgan Stanley Direct vs. GrafTech International
Performance |
| Timeline |
| Morgan Stanley Direct |
| GrafTech International |
Morgan Stanley and GrafTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and GrafTech International
The main advantage of trading using opposite Morgan Stanley and GrafTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, GrafTech International 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 GrafTech International will offset losses from the drop in GrafTech International's long position.| Morgan Stanley vs. Uranium Energy Corp | Morgan Stanley vs. Alaska Air Group | Morgan Stanley vs. Coursera | Morgan Stanley vs. Four Seasons Education |
| GrafTech International vs. Evolution Mining Limited | GrafTech International vs. American Airlines Group | GrafTech International vs. Clean Energy Fuels | GrafTech International vs. ALERION CLEANPOWER |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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