Correlation Between Morgan Stanley and Echiquier Major

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Echiquier Major 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 Echiquier Major 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 Echiquier Major SRI, you can compare the effects of market volatilities on Morgan Stanley and Echiquier Major 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 Echiquier Major. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Echiquier Major.

Diversification Opportunities for Morgan Stanley and Echiquier Major

0.11

Correlation Coefficient

Morgan Stanley  Echiquier Major

Average diversification

The 3 months correlation between Morgan and Echiquier is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Echiquier Major SRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echiquier Major SRI 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 Echiquier Major. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echiquier Major SRI has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Echiquier Major go up and down completely randomly.

Pair Corralation between Morgan Stanley and Echiquier Major

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Echiquier Major. In addition to that, Morgan Stanley is 1.2 times more volatile than Echiquier Major SRI. It trades about -0.04 of its total potential returns per unit of risk. Echiquier Major SRI is currently generating about 0.05 per unit of volatility. If you would invest  41,446  in Echiquier Major SRI on December 11, 2024 and sell it today you would earn a total of  645.00  from holding Echiquier Major SRI or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Morgan Stanley Direct  vs.  Echiquier Major SRI

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Echiquier Major SRI

Risk-Adjusted Performance

Weak

Over the last 90 days Echiquier Major SRI has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Echiquier Major is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Echiquier Major

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

The idea behind Morgan Stanley Direct and Echiquier Major SRI 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 Commodity Directory module to find actively traded commodities issued by global exchanges.