Correlation Between Morgan Stanley and Novartis
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Novartis 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 Novartis 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 Novartis AG, you can compare the effects of market volatilities on Morgan Stanley and Novartis 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 Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Novartis.
Diversification Opportunities for Morgan Stanley and Novartis
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and Novartis is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Novartis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG 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 Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Novartis go up and down completely randomly.
Pair Corralation between Morgan Stanley and Novartis
Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.21 times less return on investment than Novartis. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.0 times less risky than Novartis. It trades about 0.03 of its potential returns per unit of risk. Novartis AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 155,977 in Novartis AG on September 20, 2024 and sell it today you would earn a total of 44,440 from holding Novartis AG or generate 28.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 46.26% |
| Values | Daily Returns |
Morgan Stanley Direct vs. Novartis AG
Performance |
| Timeline |
| Morgan Stanley Direct |
| Novartis AG |
Morgan Stanley and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Novartis
The main advantage of trading using opposite Morgan Stanley and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' long position.| Morgan Stanley vs. Harmony Gold Mining | Morgan Stanley vs. Mangazeya Mining | Morgan Stanley vs. CECO Environmental Corp | Morgan Stanley vs. Hurco Companies |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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