Correlation Between Morgan Stanley and Ossiam Lux

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

Diversification Opportunities for Morgan Stanley and Ossiam Lux

0.86

Correlation Coefficient

Morgan Stanley  Ossiam Lux

Very poor diversification

The 3 months correlation between Morgan and Ossiam is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Ossiam Lux Barclays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ossiam Lux Barclays 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 Ossiam Lux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ossiam Lux Barclays has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Ossiam Lux go up and down completely randomly.

Pair Corralation between Morgan Stanley and Ossiam Lux

Given the investment horizon of 90 days Morgan Stanley is expected to generate 3.57 times less return on investment than Ossiam Lux. In addition to that, Morgan Stanley is 1.34 times more volatile than Ossiam Lux Barclays. It trades about 0.02 of its total potential returns per unit of risk. Ossiam Lux Barclays is currently generating about 0.08 per unit of volatility. If you would invest  11,662  in Ossiam Lux Barclays on September 29, 2024 and sell it today you would earn a total of  1,162  from holding Ossiam Lux Barclays or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Morgan Stanley Direct  vs.  Ossiam Lux Barclays

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 uncertain fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ossiam Lux Barclays

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ossiam Lux Barclays are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ossiam Lux is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Morgan Stanley and Ossiam Lux

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

The idea behind Morgan Stanley Direct and Ossiam Lux Barclays 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.