Correlation Between Morgan Stanley and BOE Technology

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Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and BOE Technology 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 BOE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Direct and BOE Technology Group, you can compare the effects of market volatilities on Morgan Stanley and BOE Technology 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 BOE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and BOE Technology.

Diversification Opportunities for Morgan Stanley and BOE Technology

-0.41
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Morgan Stanley and BOE Technology

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.51 times more return on investment than BOE Technology. However, Morgan Stanley Direct is 1.96 times less risky than BOE Technology. It trades about -0.04 of its potential returns per unit of risk. BOE Technology Group is currently generating about -0.08 per unit of risk. If you would invest  2,068  in Morgan Stanley Direct on October 14, 2024 and sell it today you would lose (16.00) from holding Morgan Stanley Direct or give up 0.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.48%
ValuesDaily Returns

Morgan Stanley Direct  vs.  BOE Technology Group

 Performance 
       Timeline  
Morgan Stanley Direct 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
BOE Technology Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BOE Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BOE Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Morgan Stanley and BOE Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morgan Stanley and BOE Technology

The main advantage of trading using opposite Morgan Stanley and BOE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, BOE Technology 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 BOE Technology will offset losses from the drop in BOE Technology's long position.
The idea behind Morgan Stanley Direct and BOE Technology Group 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.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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