Correlation Between Morgan Stanley and Voya High

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

Diversification Opportunities for Morgan Stanley and Voya High

-0.08

Correlation Coefficient

Morgan Stanley  Voya High

Good diversification

The 3 months correlation between Morgan and Voya is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Voya High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya High Yield 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 Voya High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya High Yield has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Voya High go up and down completely randomly.

Pair Corralation between Morgan Stanley and Voya High

Given the investment horizon of 90 days Morgan Stanley is expected to generate 3.32 times less return on investment than Voya High. In addition to that, Morgan Stanley is 4.77 times more volatile than Voya High Yield. It trades about 0.01 of its total potential returns per unit of risk. Voya High Yield is currently generating about 0.1 per unit of volatility. If you would invest  683.00  in Voya High Yield on December 27, 2024 and sell it today you would earn a total of  8.00  from holding Voya High Yield or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Morgan Stanley Direct  vs.  Voya High Yield

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

Voya High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya High Yield are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Voya High 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 Voya High

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

The idea behind Morgan Stanley Direct and Voya High Yield 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.