Correlation Between Morgan Stanley and Amundi Euro

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

Diversification Opportunities for Morgan Stanley and Amundi Euro

-0.55

Correlation Coefficient

Morgan Stanley  Amundi Euro

Excellent diversification

The 3 months correlation between Morgan and Amundi is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Amundi Euro Stoxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Euro Stoxx 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 Amundi Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Euro Stoxx has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Amundi Euro go up and down completely randomly.

Pair Corralation between Morgan Stanley and Amundi Euro

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.76 times more return on investment than Amundi Euro. However, Morgan Stanley is 1.76 times more volatile than Amundi Euro Stoxx. It trades about 0.02 of its potential returns per unit of risk. Amundi Euro Stoxx is currently generating about 0.02 per unit of risk. If you would invest  2,059  in Morgan Stanley Direct on October 4, 2024 and sell it today you would earn a total of  7.00  from holding Morgan Stanley Direct or generate 0.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Morgan Stanley Direct  vs.  Amundi Euro Stoxx

Morgan Stanley Direct

Risk-Adjusted Performance

6 of 100

OK

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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Amundi Euro Stoxx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi Euro Stoxx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Amundi Euro 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 Amundi Euro

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

The idea behind Morgan Stanley Direct and Amundi Euro Stoxx 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.