Correlation Between Morgan Stanley and EXCELSIOR UNITED

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

Diversification Opportunities for Morgan Stanley and EXCELSIOR UNITED

0.09

Correlation Coefficient

Morgan Stanley  EXCELSIOR UNITED

Significant diversification

The 3 months correlation between Morgan and EXCELSIOR is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and EXCELSIOR UNITED DEVELOPMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXCELSIOR UNITED DEV 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 EXCELSIOR UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXCELSIOR UNITED DEV has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and EXCELSIOR UNITED go up and down completely randomly.

Pair Corralation between Morgan Stanley and EXCELSIOR UNITED

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.58 times more return on investment than EXCELSIOR UNITED. However, Morgan Stanley is 1.58 times more volatile than EXCELSIOR UNITED DEVELOPMENT. It trades about -0.01 of its potential returns per unit of risk. EXCELSIOR UNITED DEVELOPMENT is currently generating about -0.18 per unit of risk. If you would invest  2,083  in Morgan Stanley Direct on December 30, 2024 and sell it today you would lose (16.00) from holding Morgan Stanley Direct or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Morgan Stanley Direct  vs.  EXCELSIOR UNITED DEVELOPMENT

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

EXCELSIOR UNITED DEV

Risk-Adjusted Performance

Very Weak

Over the last 90 days EXCELSIOR UNITED DEVELOPMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Morgan Stanley and EXCELSIOR UNITED

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

The idea behind Morgan Stanley Direct and EXCELSIOR UNITED DEVELOPMENT 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .