Correlation Between Morgan Stanley and Hood River

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

Diversification Opportunities for Morgan Stanley and Hood River

0.67

Correlation Coefficient

Morgan Stanley  Hood River

Poor diversification

The 3 months correlation between Morgan and Hood is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Hood River International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hood River International 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 Hood River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hood River International has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Hood River go up and down completely randomly.

Pair Corralation between Morgan Stanley and Hood River

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.12 times less return on investment than Hood River. In addition to that, Morgan Stanley is 1.48 times more volatile than Hood River International. It trades about 0.04 of its total potential returns per unit of risk. Hood River International is currently generating about 0.07 per unit of volatility. If you would invest  902.00  in Hood River International on October 22, 2024 and sell it today you would earn a total of  266.00  from holding Hood River International or generate 29.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	69.06%
Values	Daily Returns

Morgan Stanley Direct  vs.  Hood River International

Morgan Stanley Direct

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 14 (%) 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 February 2025.

Hood River International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hood River International are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hood River is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Hood River

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

The idea behind Morgan Stanley Direct and Hood River 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.