Correlation Between Morgan Stanley and IGEN Networks

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

Diversification Opportunities for Morgan Stanley and IGEN Networks

0.01

Correlation Coefficient

Morgan Stanley  IGEN Networks

Significant diversification

The 3 months correlation between Morgan and IGEN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and IGEN Networks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGEN Networks Corp 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 IGEN Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGEN Networks Corp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and IGEN Networks go up and down completely randomly.

Pair Corralation between Morgan Stanley and IGEN Networks

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.05 times more return on investment than IGEN Networks. However, Morgan Stanley Direct is 21.92 times less risky than IGEN Networks. It trades about 0.24 of its potential returns per unit of risk. IGEN Networks Corp is currently generating about -0.22 per unit of risk. If you would invest  2,029  in Morgan Stanley Direct on September 14, 2024 and sell it today you would earn a total of  101.00  from holding Morgan Stanley Direct or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  IGEN Networks Corp

Morgan Stanley Direct

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 11 (%) 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.

IGEN Networks Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGEN Networks Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, IGEN Networks displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and IGEN Networks

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

The idea behind Morgan Stanley Direct and IGEN Networks Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.