Correlation Between Marex Group and Morgan Stanley

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

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

Diversification Opportunities for Marex Group and Morgan Stanley

-0.4

Correlation Coefficient

Marex Group  Morgan Stanley

Very good diversification

The 3 months correlation between Marex and Morgan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Marex Group plc and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Marex Group 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 Marex Group plc 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 Marex Group i.e., Marex Group and Morgan Stanley go up and down completely randomly.

Pair Corralation between Marex Group and Morgan Stanley

Considering the 90-day investment horizon Marex Group plc is expected to generate 5.06 times more return on investment than Morgan Stanley. However, Marex Group is 5.06 times more volatile than Morgan Stanley. It trades about 0.13 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.05 per unit of risk. If you would invest  1,880  in Marex Group plc on September 12, 2024 and sell it today you would earn a total of  1,189  from holding Marex Group plc or generate 63.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.45%
Values	Daily Returns

Marex Group plc  vs.  Morgan Stanley

Marex Group plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Marex Group and Morgan Stanley

The main advantage of trading using opposite Marex Group and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marex Group 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 Marex Group plc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.