Correlation Between Morgan Stanley and Bluebik Group

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

Diversification Opportunities for Morgan Stanley and Bluebik Group

0.52

Correlation Coefficient

Morgan Stanley  Bluebik Group

Very weak diversification

The 3 months correlation between Morgan and Bluebik is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Bluebik Group PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluebik Group PCL 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 Bluebik Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluebik Group PCL has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Bluebik Group go up and down completely randomly.

Pair Corralation between Morgan Stanley and Bluebik Group

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.26 times less return on investment than Bluebik Group. But when comparing it to its historical volatility, Morgan Stanley Direct is 2.22 times less risky than Bluebik Group. It trades about 0.1 of its potential returns per unit of risk. Bluebik Group PCL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,825  in Bluebik Group PCL on September 26, 2024 and sell it today you would earn a total of  175.00  from holding Bluebik Group PCL or generate 4.58% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  Bluebik Group PCL

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bluebik Group PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluebik Group PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bluebik Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Morgan Stanley and Bluebik Group

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

The idea behind Morgan Stanley Direct and Bluebik Group PCL 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.