Correlation Between Visa and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Morgan Stanley Emerging, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Morgan Stanley.
Diversification Opportunities for Visa and Morgan Stanley
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Morgan is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Morgan Stanley Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Emerging and Visa 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 Visa Class A 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 Emerging has no effect on the direction of Visa i.e., Visa and Morgan Stanley go up and down completely randomly.
Pair Corralation between Visa and Morgan Stanley
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.75 times more return on investment than Morgan Stanley. However, Visa is 1.75 times more volatile than Morgan Stanley Emerging. It trades about 0.33 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.15 per unit of risk. If you would invest 28,960 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 2,510 from holding Visa Class A or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Morgan Stanley Emerging
Performance |
| Timeline |
| Visa Class A |
| Morgan Stanley Emerging |
Visa and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Morgan Stanley
The main advantage of trading using opposite Visa and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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