Correlation Between Morgan Stanley and GUARANTY TRUST

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and GUARANTY TRUST 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 GUARANTY TRUST 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 GUARANTY TRUST HOLDING, you can compare the effects of market volatilities on Morgan Stanley and GUARANTY TRUST 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 GUARANTY TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and GUARANTY TRUST.

Diversification Opportunities for Morgan Stanley and GUARANTY TRUST

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Morgan and GUARANTY is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and GUARANTY TRUST HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARANTY TRUST HOLDING 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 GUARANTY TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUARANTY TRUST HOLDING has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and GUARANTY TRUST go up and down completely randomly.

Pair Corralation between Morgan Stanley and GUARANTY TRUST

Given the investment horizon of 90 days Morgan Stanley is expected to generate 9.35 times less return on investment than GUARANTY TRUST. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.37 times less risky than GUARANTY TRUST. It trades about 0.04 of its potential returns per unit of risk. GUARANTY TRUST HOLDING is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  5,300  in GUARANTY TRUST HOLDING on September 28, 2024 and sell it today you would earn a total of  495.00  from holding GUARANTY TRUST HOLDING or generate 9.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Morgan Stanley Direct  vs.  GUARANTY TRUST HOLDING

 Performance 
       Timeline  
Morgan Stanley Direct 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) 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 January 2025.
GUARANTY TRUST HOLDING 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GUARANTY TRUST HOLDING are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, GUARANTY TRUST displayed solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley and GUARANTY TRUST Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morgan Stanley and GUARANTY TRUST

The main advantage of trading using opposite Morgan Stanley and GUARANTY TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, GUARANTY TRUST 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 GUARANTY TRUST will offset losses from the drop in GUARANTY TRUST's long position.
The idea behind Morgan Stanley Direct and GUARANTY TRUST HOLDING 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

Other Complementary Tools

Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Transaction History
View history of all your transactions and understand their impact on performance
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios