Correlation Between Stone Ridge and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Stone Ridge 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 Stone Ridge and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Ridge Diversified and Morgan Stanley Institutional, you can compare the effects of market volatilities on Stone Ridge 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 Stone Ridge with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Morgan Stanley.
Diversification Opportunities for Stone Ridge and Morgan Stanley
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stone and Morgan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Morgan Stanley Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Insti and Stone Ridge 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 Stone Ridge Diversified 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 Insti has no effect on the direction of Stone Ridge i.e., Stone Ridge and Morgan Stanley go up and down completely randomly.
Pair Corralation between Stone Ridge and Morgan Stanley
Assuming the 90 days horizon Stone Ridge is expected to generate 1.82 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Stone Ridge Diversified is 4.24 times less risky than Morgan Stanley. It trades about 0.14 of its potential returns per unit of risk. Morgan Stanley Institutional is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,449 in Morgan Stanley Institutional on November 5, 2024 and sell it today you would earn a total of 193.00 from holding Morgan Stanley Institutional or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Morgan Stanley Institutional
Performance |
| Timeline |
| Stone Ridge Diversified |
| Morgan Stanley Insti |
Stone Ridge and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Morgan Stanley
The main advantage of trading using opposite Stone Ridge and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge 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.| Stone Ridge vs. Columbia Global Technology | Stone Ridge vs. Dreyfus Technology Growth | Stone Ridge vs. Red Oak Technology | Stone Ridge vs. Science Technology Fund |
| Morgan Stanley vs. Columbia Convertible Securities | Morgan Stanley vs. Rationalpier 88 Convertible | Morgan Stanley vs. Fidelity Sai Convertible | Morgan Stanley vs. Virtus Convertible |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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