Correlation Between CREO MEDICAL and Morgan Stanley

Can any of the company-specific risk be diversified away by investing in both CREO MEDICAL 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 CREO MEDICAL and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CREO MEDICAL GRP and Morgan Stanley, you can compare the effects of market volatilities on CREO MEDICAL 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 CREO MEDICAL with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREO MEDICAL and Morgan Stanley.

Diversification Opportunities for CREO MEDICAL and Morgan Stanley

-0.09

Correlation Coefficient

CREO MEDICAL  Morgan Stanley

Good diversification

The 3 months correlation between CREO and Morgan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CREO MEDICAL GRP and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and CREO MEDICAL 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 CREO MEDICAL GRP 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 CREO MEDICAL i.e., CREO MEDICAL and Morgan Stanley go up and down completely randomly.

Pair Corralation between CREO MEDICAL and Morgan Stanley

Assuming the 90 days horizon CREO MEDICAL is expected to generate 1.37 times less return on investment than Morgan Stanley. In addition to that, CREO MEDICAL is 2.81 times more volatile than Morgan Stanley. It trades about 0.02 of its total potential returns per unit of risk. Morgan Stanley is currently generating about 0.06 per unit of volatility. If you would invest  8,571  in Morgan Stanley on October 27, 2024 and sell it today you would earn a total of  4,567  from holding Morgan Stanley or generate 53.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

CREO MEDICAL GRP  vs.  Morgan Stanley

CREO MEDICAL GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CREO MEDICAL GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Morgan Stanley

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Morgan Stanley exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CREO MEDICAL and Morgan Stanley

The main advantage of trading using opposite CREO MEDICAL and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREO MEDICAL 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.

The idea behind CREO MEDICAL GRP and Morgan Stanley 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.