Correlation Between Morgan Stanley and KKR Co

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and KKR Co 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 KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and KKR Co LP, you can compare the effects of market volatilities on Morgan Stanley and KKR Co 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 KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and KKR Co.

Diversification Opportunities for Morgan Stanley and KKR Co

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Morgan and KKR is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 are associated (or correlated) with KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and KKR Co go up and down completely randomly.

Pair Corralation between Morgan Stanley and KKR Co

Assuming the 90 days horizon Morgan Stanley is expected to generate 61.02 times more return on investment than KKR Co. However, Morgan Stanley is 61.02 times more volatile than KKR Co LP. It trades about 0.12 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.12 per unit of risk. If you would invest  12,390  in Morgan Stanley on December 1, 2024 and sell it today you would earn a total of  260.00  from holding Morgan Stanley or generate 2.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Morgan Stanley  vs.  KKR Co LP

 Performance 
       Timeline  
Morgan Stanley 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Morgan Stanley reported solid returns over the last few months and may actually be approaching a breakup point.
KKR Co LP 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days KKR Co LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Morgan Stanley and KKR Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morgan Stanley and KKR Co

The main advantage of trading using opposite Morgan Stanley and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, KKR Co 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 KKR Co will offset losses from the drop in KKR Co's long position.
The idea behind Morgan Stanley and KKR Co LP 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.
Check out your portfolio center.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Equity Valuation
Check real value of public entities based on technical and fundamental data