Correlation Between Morgan Stanley and Global Partners
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Global Partners 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 Global Partners 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 Global Partners LP, you can compare the effects of market volatilities on Morgan Stanley and Global Partners 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 Global Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Global Partners.
Diversification Opportunities for Morgan Stanley and Global Partners
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Morgan and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP 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 Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Global Partners go up and down completely randomly.
Pair Corralation between Morgan Stanley and Global Partners
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 4.03 times more return on investment than Global Partners. However, Morgan Stanley is 4.03 times more volatile than Global Partners LP. It trades about 0.02 of its potential returns per unit of risk. Global Partners LP is currently generating about 0.03 per unit of risk. If you would invest 2,127 in Morgan Stanley Direct on October 1, 2024 and sell it today you would earn a total of 8.00 from holding Morgan Stanley Direct or generate 0.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Morgan Stanley Direct vs. Global Partners LP
Performance |
Timeline |
Morgan Stanley Direct |
Global Partners LP |
Morgan Stanley and Global Partners Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Global Partners
The main advantage of trading using opposite Morgan Stanley and Global Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Global Partners 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 Global Partners will offset losses from the drop in Global Partners' long position.Morgan Stanley vs. EMCOR Group | Morgan Stanley vs. Chester Mining | Morgan Stanley vs. Everus Construction Group | Morgan Stanley vs. Highway Holdings Limited |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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