Correlation Between Morgan Stanley and ProConcept Marketing

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

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

Diversification Opportunities for Morgan Stanley and ProConcept Marketing

-0.32

Correlation Coefficient

Morgan Stanley  ProConcept Marketing

Very good diversification

The 3 months correlation between Morgan and ProConcept is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and ProConcept Marketing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProConcept Marketing and Morgan Stanley 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 Morgan Stanley are associated (or correlated) with ProConcept Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProConcept Marketing has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and ProConcept Marketing go up and down completely randomly.

Pair Corralation between Morgan Stanley and ProConcept Marketing

Assuming the 90 days horizon Morgan Stanley is expected to under-perform the ProConcept Marketing. But the preferred stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley is 38.36 times less risky than ProConcept Marketing. The preferred stock trades about -0.16 of its potential returns per unit of risk. The ProConcept Marketing Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8.17  in ProConcept Marketing Group on December 30, 2024 and sell it today you would earn a total of  1.83  from holding ProConcept Marketing Group or generate 22.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Morgan Stanley  vs.  ProConcept Marketing Group

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. Despite somewhat strong basic indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ProConcept Marketing

Risk-Adjusted Performance

OK

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

Pair Trading with Morgan Stanley and ProConcept Marketing

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

The idea behind Morgan Stanley and ProConcept Marketing Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.