Correlation Between Ocean Park and Morgan Stanley

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

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

Diversification Opportunities for Ocean Park and Morgan Stanley

0.45

Correlation Coefficient

Ocean Park  Morgan Stanley

Very weak diversification

The 3 months correlation between Ocean and Morgan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Park High and Morgan Stanley ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley ETF and Ocean Park 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 Ocean Park High 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 ETF has no effect on the direction of Ocean Park i.e., Ocean Park and Morgan Stanley go up and down completely randomly.

Pair Corralation between Ocean Park and Morgan Stanley

Given the investment horizon of 90 days Ocean Park High is expected to under-perform the Morgan Stanley. But the etf apears to be less risky and, when comparing its historical volatility, Ocean Park High is 1.07 times less risky than Morgan Stanley. The etf trades about -0.05 of its potential returns per unit of risk. The Morgan Stanley ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,177  in Morgan Stanley ETF on December 28, 2024 and sell it today you would earn a total of  73.00  from holding Morgan Stanley ETF or generate 1.41% return on investment over 90 days.

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

Ocean Park High  vs.  Morgan Stanley ETF

Ocean Park High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocean Park High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Morgan Stanley ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ocean Park and Morgan Stanley

The main advantage of trading using opposite Ocean Park and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Park 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 Ocean Park High and Morgan Stanley ETF 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.