Correlation Between Morgan Stanley and Exel Composites

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

Diversification Opportunities for Morgan Stanley and Exel Composites

0.04

Correlation Coefficient

Morgan Stanley  Exel Composites

Significant diversification

The 3 months correlation between Morgan and Exel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Exel Composites Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exel Composites Oyj 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 Exel Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exel Composites Oyj has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Exel Composites go up and down completely randomly.

Pair Corralation between Morgan Stanley and Exel Composites

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Exel Composites. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 2.86 times less risky than Exel Composites. The stock trades about -0.03 of its potential returns per unit of risk. The Exel Composites Oyj is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Exel Composites Oyj on December 4, 2024 and sell it today you would earn a total of  3.00  from holding Exel Composites Oyj or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Morgan Stanley Direct  vs.  Exel Composites Oyj

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

Exel Composites Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exel Composites Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Exel Composites may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Morgan Stanley and Exel Composites

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

The idea behind Morgan Stanley Direct and Exel Composites Oyj 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.