Correlation Between Morgan Stanley and CVC Capital
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and CVC Capital 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 CVC Capital 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 CVC Capital Partners, you can compare the effects of market volatilities on Morgan Stanley and CVC Capital 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 CVC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and CVC Capital.
Diversification Opportunities for Morgan Stanley and CVC Capital
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and CVC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and CVC Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Capital Partners 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 CVC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Capital Partners has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and CVC Capital go up and down completely randomly.
Pair Corralation between Morgan Stanley and CVC Capital
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.45 times more return on investment than CVC Capital. However, Morgan Stanley Direct is 2.23 times less risky than CVC Capital. It trades about -0.01 of its potential returns per unit of risk. CVC Capital Partners is currently generating about -0.07 per unit of risk. If you would invest 2,085 in Morgan Stanley Direct on December 27, 2024 and sell it today you would lose (20.00) from holding Morgan Stanley Direct or give up 0.96% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 93.75% |
Values | Daily Returns |
Morgan Stanley Direct vs. CVC Capital Partners
Performance |
Timeline |
Morgan Stanley Direct |
CVC Capital Partners |
Morgan Stanley and CVC Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and CVC Capital
The main advantage of trading using opposite Morgan Stanley and CVC Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, CVC Capital 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 CVC Capital will offset losses from the drop in CVC Capital's long position.Morgan Stanley vs. KVH Industries | Morgan Stanley vs. Western Copper and | Morgan Stanley vs. Olympic Steel | Morgan Stanley vs. Radcom |
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Check out your portfolio center.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.
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