Correlation Between Marfrig Global and MORGAN

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

By analyzing existing cross correlation between Marfrig Global Foods and MORGAN STANLEY MTN, you can compare the effects of market volatilities on Marfrig Global and MORGAN 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 Marfrig Global with a short position of MORGAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and MORGAN.

Diversification Opportunities for Marfrig Global and MORGAN

-0.27

Correlation Coefficient

Marfrig Global  MORGAN

Very good diversification

The 3 months correlation between Marfrig and MORGAN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and MORGAN STANLEY MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MORGAN STANLEY MTN and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with MORGAN. 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 MTN has no effect on the direction of Marfrig Global i.e., Marfrig Global and MORGAN go up and down completely randomly.

Pair Corralation between Marfrig Global and MORGAN

Assuming the 90 days horizon Marfrig Global Foods is expected to under-perform the MORGAN. In addition to that, Marfrig Global is 9.91 times more volatile than MORGAN STANLEY MTN. It trades about -0.08 of its total potential returns per unit of risk. MORGAN STANLEY MTN is currently generating about -0.09 per unit of volatility. If you would invest  9,890  in MORGAN STANLEY MTN on November 29, 2024 and sell it today you would lose (207.00) from holding MORGAN STANLEY MTN or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Marfrig Global Foods  vs.  MORGAN STANLEY MTN

Marfrig Global Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marfrig Global Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

MORGAN STANLEY MTN

Risk-Adjusted Performance

Very Weak

Over the last 90 days MORGAN STANLEY MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MORGAN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marfrig Global and MORGAN

The main advantage of trading using opposite Marfrig Global and MORGAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, MORGAN 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 will offset losses from the drop in MORGAN's long position.

The idea behind Marfrig Global Foods and MORGAN STANLEY MTN 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.