Correlation Between Morgan Stanley and Bayside Corp

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

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

Diversification Opportunities for Morgan Stanley and Bayside Corp

-0.84

Correlation Coefficient

Morgan Stanley  Bayside Corp

Pay attention - limited upside

The 3 months correlation between Morgan and Bayside is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Bayside Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayside Corp 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 Bayside Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayside Corp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Bayside Corp go up and down completely randomly.

Pair Corralation between Morgan Stanley and Bayside Corp

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 125.22 times less return on investment than Bayside Corp. But when comparing it to its historical volatility, Morgan Stanley is 8.58 times less risky than Bayside Corp. It trades about 0.01 of its potential returns per unit of risk. Bayside Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Bayside Corp on October 9, 2024 and sell it today you would earn a total of  24.00  from holding Bayside Corp or generate 24.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Morgan Stanley  vs.  Bayside Corp

Morgan Stanley

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bayside Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayside Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Morgan Stanley and Bayside Corp

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

The idea behind Morgan Stanley and Bayside Corp 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.