Correlation Between Morgan Stanley and KAT Exploration
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and KAT Exploration 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 KAT Exploration 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 KAT Exploration, you can compare the effects of market volatilities on Morgan Stanley and KAT Exploration 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 KAT Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and KAT Exploration.
Diversification Opportunities for Morgan Stanley and KAT Exploration
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Morgan and KAT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and KAT Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAT Exploration 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 KAT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAT Exploration has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and KAT Exploration go up and down completely randomly.
Pair Corralation between Morgan Stanley and KAT Exploration
Given the investment horizon of 90 days Morgan Stanley is expected to generate 460.16 times less return on investment than KAT Exploration. But when comparing it to its historical volatility, Morgan Stanley Direct is 14.18 times less risky than KAT Exploration. It trades about 0.0 of its potential returns per unit of risk. KAT Exploration is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.03 in KAT Exploration on December 26, 2024 and sell it today you would earn a total of 0.00 from holding KAT Exploration or generate 0.0% 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. KAT Exploration
Performance |
Timeline |
Morgan Stanley Direct |
KAT Exploration |
Morgan Stanley and KAT Exploration Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and KAT Exploration
The main advantage of trading using opposite Morgan Stanley and KAT Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, KAT Exploration 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 KAT Exploration will offset losses from the drop in KAT Exploration's long position.Morgan Stanley vs. Western Copper and | Morgan Stanley vs. Eastman Kodak Co | Morgan Stanley vs. Highway Holdings Limited | Morgan Stanley vs. Topbuild Corp |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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