Correlation Between Morgan Stanley and Mangels Industrial

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

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

Diversification Opportunities for Morgan Stanley and Mangels Industrial

0.41

Correlation Coefficient

Morgan Stanley  Mangels Industrial

Very weak diversification

The 3 months correlation between Morgan and Mangels is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial 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 Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Mangels Industrial go up and down completely randomly.

Pair Corralation between Morgan Stanley and Mangels Industrial

Assuming the 90 days trading horizon Morgan Stanley is expected to generate 7.61 times less return on investment than Mangels Industrial. But when comparing it to its historical volatility, Morgan Stanley is 2.82 times less risky than Mangels Industrial. It trades about 0.02 of its potential returns per unit of risk. Mangels Industrial SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  612.00  in Mangels Industrial SA on December 1, 2024 and sell it today you would earn a total of  48.00  from holding Mangels Industrial SA or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Morgan Stanley  vs.  Mangels Industrial SA

Morgan Stanley

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mangels Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mangels Industrial SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mangels Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Mangels Industrial

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

The idea behind Morgan Stanley and Mangels Industrial SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.