Correlation Between Morgan Stanley and OppFi

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

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

Diversification Opportunities for Morgan Stanley and OppFi

0.76

Correlation Coefficient

Morgan Stanley  OppFi

Poor diversification

The 3 months correlation between Morgan and OppFi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and OppFi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OppFi 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 OppFi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OppFi Inc has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and OppFi go up and down completely randomly.

Pair Corralation between Morgan Stanley and OppFi

Allowing for the 90-day total investment horizon Morgan Stanley is expected to under-perform the OppFi. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley is 2.78 times less risky than OppFi. The stock trades about -0.01 of its potential returns per unit of risk. The OppFi Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  765.00  in OppFi Inc on December 27, 2024 and sell it today you would earn a total of  230.00  from holding OppFi Inc or generate 30.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley  vs.  OppFi Inc

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. In spite of comparatively stable basic indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

OppFi Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and OppFi

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

The idea behind Morgan Stanley and OppFi Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.