Correlation Between United Natural and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Morgan Stanley, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Morgan Stanley.
Diversification Opportunities for United Natural and Morgan Stanley
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Morgan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and United Natural 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 Natural Foods 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 United Natural i.e., United Natural and Morgan Stanley go up and down completely randomly.
Pair Corralation between United Natural and Morgan Stanley
Assuming the 90 days horizon United Natural Foods is expected to generate 2.38 times more return on investment than Morgan Stanley. However, United Natural is 2.38 times more volatile than Morgan Stanley. It trades about 0.07 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.17 per unit of risk. If you would invest 1,431 in United Natural Foods on August 27, 2024 and sell it today you would earn a total of 779.00 from holding United Natural Foods or generate 54.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 80.0% |
| Values | Daily Returns |
United Natural Foods vs. Morgan Stanley
Performance |
| Timeline |
| United Natural Foods |
| Morgan Stanley |
United Natural and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Morgan Stanley
The main advantage of trading using opposite United Natural and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. Jernimo Martins SGPS | United Natural vs. Axfood AB | United Natural vs. PF Bakkafrost | United Natural vs. Metro AG |
| Morgan Stanley vs. PLAY2CHILL SA ZY | Morgan Stanley vs. TYSON FOODS A | Morgan Stanley vs. ANTA SPORTS PRODUCT | Morgan Stanley vs. Monster Beverage Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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