Correlation Between Morgan Stanley and Esso (Thailand)
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Esso (Thailand) 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 Esso (Thailand) 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 Esso Public, you can compare the effects of market volatilities on Morgan Stanley and Esso (Thailand) 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 Esso (Thailand). Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Esso (Thailand).
Diversification Opportunities for Morgan Stanley and Esso (Thailand)
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Morgan and Esso is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Esso Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esso (Thailand) 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 Esso (Thailand). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esso (Thailand) has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Esso (Thailand) go up and down completely randomly.
Pair Corralation between Morgan Stanley and Esso (Thailand)
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.43 times more return on investment than Esso (Thailand). However, Morgan Stanley Direct is 2.3 times less risky than Esso (Thailand). It trades about 0.05 of its potential returns per unit of risk. Esso Public is currently generating about 0.01 per unit of risk. If you would invest 2,063 in Morgan Stanley Direct on September 22, 2024 and sell it today you would earn a total of 21.00 from holding Morgan Stanley Direct or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Morgan Stanley Direct vs. Esso Public
Performance |
| Timeline |
| Morgan Stanley Direct |
| Esso (Thailand) |
Morgan Stanley and Esso (Thailand) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Esso (Thailand)
The main advantage of trading using opposite Morgan Stanley and Esso (Thailand) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Esso (Thailand) 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 Esso (Thailand) will offset losses from the drop in Esso (Thailand)'s long position.| Morgan Stanley vs. Beauty Health Co | Morgan Stanley vs. Corporacion America Airports | Morgan Stanley vs. Air Lease | Morgan Stanley vs. Rocky Brands |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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