Correlation Between Intel and Morgan Stanley

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

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

Diversification Opportunities for Intel and Morgan Stanley

0.85

Correlation Coefficient

Intel  Morgan Stanley

Very poor diversification

The 3 months correlation between Intel and Morgan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Intel 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 Intel 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 Intel 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 Intel i.e., Intel and Morgan Stanley go up and down completely randomly.

Pair Corralation between Intel and Morgan Stanley

Given the investment horizon of 90 days Intel is expected to generate 6.38 times less return on investment than Morgan Stanley. In addition to that, Intel is 4.46 times more volatile than Morgan Stanley ETF. It trades about 0.01 of its total potential returns per unit of risk. Morgan Stanley ETF is currently generating about 0.34 per unit of volatility. If you would invest  6,978  in Morgan Stanley ETF on September 5, 2024 and sell it today you would earn a total of  372.00  from holding Morgan Stanley ETF or generate 5.33% return on investment over 90 days.

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

Intel  vs.  Morgan Stanley ETF

Intel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley ETF

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intel and Morgan Stanley

The main advantage of trading using opposite Intel and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.