Correlation Between Morgan Stanley and Djurslands Bank

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

Diversification Opportunities for Morgan Stanley and Djurslands Bank

0.41

Correlation Coefficient

Morgan Stanley  Djurslands Bank

Very weak diversification

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

Pair Corralation between Morgan Stanley and Djurslands Bank

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.66 times less return on investment than Djurslands Bank. In addition to that, Morgan Stanley is 1.16 times more volatile than Djurslands Bank. It trades about 0.04 of its total potential returns per unit of risk. Djurslands Bank is currently generating about 0.07 per unit of volatility. If you would invest  46,600  in Djurslands Bank on October 7, 2024 and sell it today you would earn a total of  11,400  from holding Djurslands Bank or generate 24.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

Morgan Stanley Direct  vs.  Djurslands Bank

Morgan Stanley Direct

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 9 (%) 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 February 2025.

Djurslands Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Djurslands Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Djurslands Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Morgan Stanley and Djurslands Bank

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

The idea behind Morgan Stanley Direct and Djurslands Bank 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.