Correlation Between Stifel Financial and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Stifel Financial 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 Stifel Financial and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stifel Financial Corp and Morgan Stanley, you can compare the effects of market volatilities on Stifel Financial 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 Stifel Financial with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and Morgan Stanley.
Diversification Opportunities for Stifel Financial and Morgan Stanley
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stifel and Morgan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial Corp and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Stifel Financial 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 Stifel Financial Corp 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 Stifel Financial i.e., Stifel Financial and Morgan Stanley go up and down completely randomly.
Pair Corralation between Stifel Financial and Morgan Stanley
Assuming the 90 days horizon Stifel Financial Corp is expected to under-perform the Morgan Stanley. In addition to that, Stifel Financial is 2.7 times more volatile than Morgan Stanley. It trades about -0.15 of its total potential returns per unit of risk. Morgan Stanley is currently generating about -0.04 per unit of volatility. If you would invest 2,616 in Morgan Stanley on October 31, 2024 and sell it today you would lose (47.00) from holding Morgan Stanley or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stifel Financial Corp vs. Morgan Stanley
Performance |
| Timeline |
| Stifel Financial Corp |
| Morgan Stanley |
Stifel Financial and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stifel Financial and Morgan Stanley
The main advantage of trading using opposite Stifel Financial and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial 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.| Stifel Financial vs. Stifel Financial Corp | Stifel Financial vs. Stifel Financial Corp | Stifel Financial vs. Morgan Stanley | Stifel Financial vs. The Charles Schwab |
| Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. KeyCorp | Morgan Stanley vs. Bank of America |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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