Correlation Between Morgan Stanley and Nuveen Preferred

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

Diversification Opportunities for Morgan Stanley and Nuveen Preferred

0.35

Correlation Coefficient

Morgan Stanley  Nuveen Preferred

Weak diversification

The 3 months correlation between Morgan and Nuveen is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Nuveen Preferred Securites in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Sec 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 Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Sec has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Nuveen Preferred go up and down completely randomly.

Pair Corralation between Morgan Stanley and Nuveen Preferred

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.36 times more return on investment than Nuveen Preferred. However, Morgan Stanley is 1.36 times more volatile than Nuveen Preferred Securites. It trades about 0.04 of its potential returns per unit of risk. Nuveen Preferred Securites is currently generating about -0.01 per unit of risk. If you would invest  1,907  in Morgan Stanley Direct on September 13, 2024 and sell it today you would earn a total of  223.00  from holding Morgan Stanley Direct or generate 11.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	64.44%
Values	Daily Returns

Morgan Stanley Direct  vs.  Nuveen Preferred Securites

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.

Nuveen Preferred Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Preferred Securites has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Nuveen Preferred is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Morgan Stanley and Nuveen Preferred

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

The idea behind Morgan Stanley Direct and Nuveen Preferred Securites 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.