Correlation Between Morgan Stanley and Comcast Holdings

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

Diversification Opportunities for Morgan Stanley and Comcast Holdings

0.41

Correlation Coefficient

Morgan Stanley  Comcast Holdings

Very weak diversification

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

Pair Corralation between Morgan Stanley and Comcast Holdings

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1606.92 times less return on investment than Comcast Holdings. But when comparing it to its historical volatility, Morgan Stanley Direct is 154.14 times less risky than Comcast Holdings. It trades about 0.02 of its potential returns per unit of risk. Comcast Holdings Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,849  in Comcast Holdings Corp on September 29, 2024 and sell it today you would earn a total of  258.00  from holding Comcast Holdings Corp or generate 4.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.32%
Values	Daily Returns

Morgan Stanley Direct  vs.  Comcast Holdings Corp

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.

Comcast Holdings Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Comcast Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Comcast Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Comcast Holdings

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

The idea behind Morgan Stanley Direct and Comcast Holdings Corp 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.