Correlation Between EXp World and Morgan Stanley

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

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

Diversification Opportunities for EXp World and Morgan Stanley

-0.43

Correlation Coefficient

EXp World  Morgan Stanley

Very good diversification

The 3 months correlation between EXp and Morgan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding eXp World Holdings and Morgan Stanley Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Focus and EXp World 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 eXp World Holdings 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 Focus has no effect on the direction of EXp World i.e., EXp World and Morgan Stanley go up and down completely randomly.

Pair Corralation between EXp World and Morgan Stanley

If you would invest  1,008  in Morgan Stanley Focus on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Morgan Stanley Focus or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	22.73%
Values	Daily Returns

eXp World Holdings  vs.  Morgan Stanley Focus

eXp World Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eXp World Holdings 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 fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Morgan Stanley Focus

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Morgan Stanley Focus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 EXp World and Morgan Stanley

The main advantage of trading using opposite EXp World and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXp World 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 eXp World Holdings and Morgan Stanley Focus 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.