Correlation Between Morgan Stanley and BetaPro Natural

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

Diversification Opportunities for Morgan Stanley and BetaPro Natural

0.31

Correlation Coefficient

Morgan Stanley  BetaPro Natural

Weak diversification

The 3 months correlation between Morgan and BetaPro is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and BetaPro Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Natural Gas 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 BetaPro Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Natural Gas has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and BetaPro Natural go up and down completely randomly.

Pair Corralation between Morgan Stanley and BetaPro Natural

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.11 times more return on investment than BetaPro Natural. However, Morgan Stanley Direct is 8.83 times less risky than BetaPro Natural. It trades about -0.01 of its potential returns per unit of risk. BetaPro Natural Gas is currently generating about -0.09 per unit of risk. If you would invest  2,083  in Morgan Stanley Direct on December 29, 2024 and sell it today you would lose (16.00) from holding Morgan Stanley Direct or give up 0.77% of portfolio value over 90 days.

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

Morgan Stanley Direct  vs.  BetaPro Natural Gas

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 current stock price mess, may contribute to short-term losses for the institutional investors.

BetaPro Natural Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days BetaPro Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Morgan Stanley and BetaPro Natural

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

The idea behind Morgan Stanley Direct and BetaPro Natural Gas 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .