Correlation Between Morgan Stanley and The Hartford

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

Diversification Opportunities for Morgan Stanley and The Hartford

-0.43

Correlation Coefficient

Morgan Stanley  The Hartford

Very good diversification

The 3 months correlation between Morgan and The is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and The Hartford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Interna 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Interna has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and The Hartford go up and down completely randomly.

Pair Corralation between Morgan Stanley and The Hartford

Given the investment horizon of 90 days Morgan Stanley is expected to generate 6.4 times less return on investment than The Hartford. In addition to that, Morgan Stanley is 1.17 times more volatile than The Hartford International. It trades about 0.05 of its total potential returns per unit of risk. The Hartford International is currently generating about 0.34 per unit of volatility. If you would invest  1,748  in The Hartford International on December 19, 2024 and sell it today you would earn a total of  309.00  from holding The Hartford International or generate 17.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  The Hartford International

Morgan Stanley Direct

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Hartford Interna

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford International are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, The Hartford showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and The Hartford

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

The idea behind Morgan Stanley Direct and The Hartford International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.