Correlation Between Morgan Stanley and Loomis AB
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Loomis AB 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 Loomis AB 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 Loomis AB, you can compare the effects of market volatilities on Morgan Stanley and Loomis AB 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 Loomis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Loomis AB.
Diversification Opportunities for Morgan Stanley and Loomis AB
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and Loomis is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Loomis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis AB 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 Loomis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis AB has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Loomis AB go up and down completely randomly.
Pair Corralation between Morgan Stanley and Loomis AB
Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.94 times less return on investment than Loomis AB. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.62 times less risky than Loomis AB. It trades about 0.04 of its potential returns per unit of risk. Loomis AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,430 in Loomis AB on September 14, 2024 and sell it today you would earn a total of 768.00 from holding Loomis AB or generate 31.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 74.5% |
| Values | Daily Returns |
Morgan Stanley Direct vs. Loomis AB
Performance |
| Timeline |
| Morgan Stanley Direct |
| Loomis AB |
Morgan Stanley and Loomis AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Loomis AB
The main advantage of trading using opposite Morgan Stanley and Loomis AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Loomis AB 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 Loomis AB will offset losses from the drop in Loomis AB's long position.| Morgan Stanley vs. Sun Country Airlines | Morgan Stanley vs. Arm Holdings plc | Morgan Stanley vs. Ultra Clean Holdings | Morgan Stanley vs. Valens |
| Loomis AB vs. Allegion PLC | Loomis AB vs. MSA Safety | Loomis AB vs. Resideo Technologies | Loomis AB vs. NL Industries |
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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