Correlation Between Morgan Stanley and Green Impact

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

Diversification Opportunities for Morgan Stanley and Green Impact

0.23

Correlation Coefficient

Morgan Stanley  Green Impact

Modest diversification

The 3 months correlation between Morgan and Green is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Green Impact Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Impact 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 Green Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Impact Partners has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Green Impact go up and down completely randomly.

Pair Corralation between Morgan Stanley and Green Impact

Given the investment horizon of 90 days Morgan Stanley is expected to generate 14.39 times less return on investment than Green Impact. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.57 times less risky than Green Impact. It trades about 0.01 of its potential returns per unit of risk. Green Impact Partners is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Green Impact Partners on December 27, 2024 and sell it today you would earn a total of  11.00  from holding Green Impact Partners or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Morgan Stanley Direct  vs.  Green Impact Partners

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.

Green Impact Partners

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Green Impact Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Green Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and Green Impact

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

The idea behind Morgan Stanley Direct and Green Impact Partners 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.