Correlation Between Embrace Change and Morgan Stanley

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

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

Diversification Opportunities for Embrace Change and Morgan Stanley

-0.37

Correlation Coefficient

Embrace Change  Morgan Stanley

Very good diversification

The 3 months correlation between Embrace and Morgan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and Morgan Stanley go up and down completely randomly.

Pair Corralation between Embrace Change and Morgan Stanley

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 7.6 times more return on investment than Morgan Stanley. However, Embrace Change is 7.6 times more volatile than Morgan Stanley. It trades about 0.18 of its potential returns per unit of risk. Morgan Stanley is currently generating about -0.05 per unit of risk. If you would invest  8.52  in Embrace Change Acquisition on December 28, 2024 and sell it today you would earn a total of  9.48  from holding Embrace Change Acquisition or generate 111.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.49%
Values	Daily Returns

Embrace Change Acquisition  vs.  Morgan Stanley

Embrace Change Acqui

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Embrace Change reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Embrace Change and Morgan Stanley

The main advantage of trading using opposite Embrace Change and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change 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 Embrace Change Acquisition 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.