Correlation Between Morgan Stanley and ENGIE ADR1

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and ENGIE ADR1 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 ENGIE ADR1 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 ENGIE ADR1 EO, you can compare the effects of market volatilities on Morgan Stanley and ENGIE ADR1 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 ENGIE ADR1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and ENGIE ADR1.

Diversification Opportunities for Morgan Stanley and ENGIE ADR1

-0.69

Correlation Coefficient

Morgan Stanley  ENGIE ADR1

Excellent diversification

The 3 months correlation between Morgan and ENGIE is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and ENGIE ADR1 EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE ADR1 EO 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 ENGIE ADR1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE ADR1 EO has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and ENGIE ADR1 go up and down completely randomly.

Pair Corralation between Morgan Stanley and ENGIE ADR1

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.15 times less return on investment than ENGIE ADR1. In addition to that, Morgan Stanley is 1.07 times more volatile than ENGIE ADR1 EO. It trades about 0.03 of its total potential returns per unit of risk. ENGIE ADR1 EO is currently generating about 0.04 per unit of volatility. If you would invest  1,124  in ENGIE ADR1 EO on September 25, 2024 and sell it today you would earn a total of  336.00  from holding ENGIE ADR1 EO or generate 29.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	46.05%
Values	Daily Returns

Morgan Stanley Direct  vs.  ENGIE ADR1 EO

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ENGIE ADR1 EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENGIE ADR1 EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, ENGIE ADR1 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 ENGIE ADR1

The main advantage of trading using opposite Morgan Stanley and ENGIE ADR1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, ENGIE ADR1 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 ENGIE ADR1 will offset losses from the drop in ENGIE ADR1's long position.

The idea behind Morgan Stanley Direct and ENGIE ADR1 EO 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.