Correlation Between Morgan Stanley and Gabelli Utility

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

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

Diversification Opportunities for Morgan Stanley and Gabelli Utility

0.22

Correlation Coefficient

Morgan Stanley  Gabelli Utility

Modest diversification

The 3 months correlation between Morgan and Gabelli is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley China and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed and Morgan Stanley 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 Morgan Stanley China are associated (or correlated) with Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Gabelli Utility go up and down completely randomly.

Pair Corralation between Morgan Stanley and Gabelli Utility

Considering the 90-day investment horizon Morgan Stanley is expected to generate 1.18 times less return on investment than Gabelli Utility. But when comparing it to its historical volatility, Morgan Stanley China is 1.1 times less risky than Gabelli Utility. It trades about 0.07 of its potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  514.00  in Gabelli Utility Closed on December 25, 2024 and sell it today you would earn a total of  23.00  from holding Gabelli Utility Closed or generate 4.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley China  vs.  Gabelli Utility Closed

Morgan Stanley China

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley China are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Gabelli Utility Closed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Gabelli Utility is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Morgan Stanley and Gabelli Utility

The main advantage of trading using opposite Morgan Stanley and Gabelli Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Gabelli Utility 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 Gabelli Utility will offset losses from the drop in Gabelli Utility's long position.

The idea behind Morgan Stanley China and Gabelli Utility Closed 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.