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 China, 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
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Morgan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Morgan Stanley China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley China 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 China 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 0.97 times more return on investment than Morgan Stanley. However, Visa Class A is 1.03 times less risky than Morgan Stanley. It trades about 0.1 of its potential returns per unit of risk. Morgan Stanley China is currently generating about -0.01 per unit of risk. If you would invest 22,355 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 9,153 from holding Visa Class A or generate 40.94% 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 China
Performance |
| Timeline |
| Visa Class A |
| Morgan Stanley China |
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 |
| Morgan Stanley vs. Aqr Long Short Equity | Morgan Stanley vs. Old Westbury Short Term | Morgan Stanley vs. Ab Select Longshort | Morgan Stanley vs. Siit Ultra Short |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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