Correlation Between Morgan Stanley and Standard Pacific

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

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

Diversification Opportunities for Morgan Stanley and Standard Pacific

0.0

Correlation Coefficient

Morgan Stanley  Standard Pacific

Pay attention - limited upside

The 3 months correlation between Morgan and Standard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Standard Pacific Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Pacific 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 Standard Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Pacific Corp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Standard Pacific go up and down completely randomly.

Pair Corralation between Morgan Stanley and Standard Pacific

If you would invest  9,751  in Morgan Stanley on September 27, 2024 and sell it today you would earn a total of  3,052  from holding Morgan Stanley or generate 31.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Morgan Stanley  vs.  Standard Pacific Corp

Morgan Stanley

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Standard Pacific Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Pacific Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Standard Pacific is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and Standard Pacific

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

The idea behind Morgan Stanley and Standard Pacific 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.