Correlation Between BRAEMAR HOTELS and Morgan Stanley

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

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

Diversification Opportunities for BRAEMAR HOTELS and Morgan Stanley

0.79

Correlation Coefficient

BRAEMAR HOTELS  Morgan Stanley

Poor diversification

The 3 months correlation between BRAEMAR and Morgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BRAEMAR HOTELS RES and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and BRAEMAR HOTELS 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 BRAEMAR HOTELS RES 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 BRAEMAR HOTELS i.e., BRAEMAR HOTELS and Morgan Stanley go up and down completely randomly.

Pair Corralation between BRAEMAR HOTELS and Morgan Stanley

Assuming the 90 days horizon BRAEMAR HOTELS RES is expected to under-perform the Morgan Stanley. In addition to that, BRAEMAR HOTELS is 2.2 times more volatile than Morgan Stanley. It trades about -0.2 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  12,314  in Morgan Stanley on October 9, 2024 and sell it today you would lose (188.00) from holding Morgan Stanley or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

BRAEMAR HOTELS RES  vs.  Morgan Stanley

BRAEMAR HOTELS RES

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRAEMAR HOTELS RES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BRAEMAR HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Morgan Stanley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRAEMAR HOTELS and Morgan Stanley

The main advantage of trading using opposite BRAEMAR HOTELS and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRAEMAR HOTELS 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 BRAEMAR HOTELS RES 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.