Correlation Between MPH Health and Morgan Stanley

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

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

Diversification Opportunities for MPH Health and Morgan Stanley

-0.1

Correlation Coefficient

MPH Health  Morgan Stanley

Good diversification

The 3 months correlation between MPH and Morgan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MPH Health Care and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and MPH Health 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 MPH Health Care 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 MPH Health i.e., MPH Health and Morgan Stanley go up and down completely randomly.

Pair Corralation between MPH Health and Morgan Stanley

Assuming the 90 days trading horizon MPH Health Care is expected to generate 0.51 times more return on investment than Morgan Stanley. However, MPH Health Care is 1.98 times less risky than Morgan Stanley. It trades about 0.04 of its potential returns per unit of risk. Morgan Stanley is currently generating about -0.18 per unit of risk. If you would invest  2,240  in MPH Health Care on December 21, 2024 and sell it today you would earn a total of  60.00  from holding MPH Health Care or generate 2.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.63%
Values	Daily Returns

MPH Health Care  vs.  Morgan Stanley

MPH Health Care

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MPH Health Care are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, MPH Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Morgan Stanley

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MPH Health and Morgan Stanley

The main advantage of trading using opposite MPH Health and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPH Health 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 MPH Health Care 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.