Correlation Between National CineMedia and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Morgan Stanley 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 National CineMedia and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Morgan Stanley Direct, you can compare the effects of market volatilities on National CineMedia and Morgan Stanley 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 National CineMedia with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Morgan Stanley.
Diversification Opportunities for National CineMedia and Morgan Stanley
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Morgan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct and National CineMedia 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 National CineMedia are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Direct has no effect on the direction of National CineMedia i.e., National CineMedia and Morgan Stanley go up and down completely randomly.
Pair Corralation between National CineMedia and Morgan Stanley
Given the investment horizon of 90 days National CineMedia is expected to generate 1.96 times more return on investment than Morgan Stanley. However, National CineMedia is 1.96 times more volatile than Morgan Stanley Direct. It trades about 0.07 of its potential returns per unit of risk. Morgan Stanley Direct is currently generating about 0.03 per unit of risk. If you would invest 426.00 in National CineMedia on September 21, 2024 and sell it today you would earn a total of 248.00 from holding National CineMedia or generate 58.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.5% |
| Values | Daily Returns |
National CineMedia vs. Morgan Stanley Direct
Performance |
| Timeline |
| National CineMedia |
| Morgan Stanley Direct |
National CineMedia and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Morgan Stanley
The main advantage of trading using opposite National CineMedia and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Kidoz Inc | National CineMedia vs. Snipp Interactive |
| Morgan Stanley vs. Sabre Corpo | Morgan Stanley vs. SFL Corporation | Morgan Stanley vs. National CineMedia | Morgan Stanley vs. Marchex |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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