Correlation Between Public Storage and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Public Storage 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 Public Storage and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Morgan Stanley, you can compare the effects of market volatilities on Public Storage 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 Public Storage with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Morgan Stanley.
Diversification Opportunities for Public Storage and Morgan Stanley
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Public and Morgan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Public Storage 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 Public Storage 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 has no effect on the direction of Public Storage i.e., Public Storage and Morgan Stanley go up and down completely randomly.
Pair Corralation between Public Storage and Morgan Stanley
Assuming the 90 days horizon Public Storage is expected to generate 2.34 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Public Storage is 1.15 times less risky than Morgan Stanley. It trades about 0.04 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,652 in Morgan Stanley on September 4, 2024 and sell it today you would earn a total of 3,894 from holding Morgan Stanley or generate 45.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 61.19% |
| Values | Daily Returns |
Public Storage vs. Morgan Stanley
Performance |
| Timeline |
| Public Storage |
| Morgan Stanley |
Public Storage and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Morgan Stanley
The main advantage of trading using opposite Public Storage and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage 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.| Public Storage vs. Prologis | Public Storage vs. SEGRO Plc | Public Storage vs. Yara International ASA | Public Storage vs. EastGroup Properties |
| Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. Superior Plus Corp | Morgan Stanley vs. NMI Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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