Correlation Between United Guardian and MORGAN

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Can any of the company-specific risk be diversified away by investing in both United Guardian and MORGAN 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 United Guardian and MORGAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and MORGAN STANLEY 3125, you can compare the effects of market volatilities on United Guardian and MORGAN 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 United Guardian with a short position of MORGAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and MORGAN.

Diversification Opportunities for United Guardian and MORGAN

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between United and MORGAN is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and MORGAN STANLEY 3125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MORGAN STANLEY 3125 and United Guardian 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 United Guardian are associated (or correlated) with MORGAN. 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 3125 has no effect on the direction of United Guardian i.e., United Guardian and MORGAN go up and down completely randomly.

Pair Corralation between United Guardian and MORGAN

Allowing for the 90-day total investment horizon United Guardian is expected to generate 3.29 times more return on investment than MORGAN. However, United Guardian is 3.29 times more volatile than MORGAN STANLEY 3125. It trades about 0.36 of its potential returns per unit of risk. MORGAN STANLEY 3125 is currently generating about -0.19 per unit of risk. If you would invest  965.00  in United Guardian on October 25, 2024 and sell it today you would earn a total of  104.00  from holding United Guardian or generate 10.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.0%
ValuesDaily Returns

United Guardian  vs.  MORGAN STANLEY 3125

 Performance 
       Timeline  
United Guardian 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
MORGAN STANLEY 3125 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MORGAN STANLEY 3125 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MORGAN is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

United Guardian and MORGAN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Guardian and MORGAN

The main advantage of trading using opposite United Guardian and MORGAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian position performs unexpectedly, MORGAN 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 will offset losses from the drop in MORGAN's long position.
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The idea behind United Guardian and MORGAN STANLEY 3125 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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