Correlation Between Morgan Stanley and Biogen
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Biogen 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 Biogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Biogen Inc, you can compare the effects of market volatilities on Morgan Stanley and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Biogen.
Diversification Opportunities for Morgan Stanley and Biogen
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Morgan and Biogen is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Biogen go up and down completely randomly.
Pair Corralation between Morgan Stanley and Biogen
Assuming the 90 days horizon Morgan Stanley is expected to generate 1.11 times more return on investment than Biogen. However, Morgan Stanley is 1.11 times more volatile than Biogen Inc. It trades about 0.06 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.06 per unit of risk. If you would invest 153,293 in Morgan Stanley on September 24, 2024 and sell it today you would earn a total of 94,691 from holding Morgan Stanley or generate 61.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Morgan Stanley vs. Biogen Inc
Performance |
Timeline |
Morgan Stanley |
Biogen Inc |
Morgan Stanley and Biogen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Biogen
The main advantage of trading using opposite Morgan Stanley and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.Morgan Stanley vs. The Charles Schwab | Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. Value Grupo Financiero | Morgan Stanley vs. Corporativo GBM SAB |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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