Correlation Between Morgan Stanley and Marui Group

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

Diversification Opportunities for Morgan Stanley and Marui Group

0.05

Correlation Coefficient

Morgan Stanley  Marui Group

Significant diversification

The 3 months correlation between Morgan and Marui is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Marui Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marui Group 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 Marui Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marui Group has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Marui Group go up and down completely randomly.

Pair Corralation between Morgan Stanley and Marui Group

Given the investment horizon of 90 days Morgan Stanley is expected to generate 19.98 times less return on investment than Marui Group. But when comparing it to its historical volatility, Morgan Stanley Direct is 6.2 times less risky than Marui Group. It trades about 0.04 of its potential returns per unit of risk. Marui Group Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,931  in Marui Group Co on September 28, 2024 and sell it today you would earn a total of  439.00  from holding Marui Group Co or generate 14.98% 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.  Marui Group Co

Morgan Stanley Direct

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) 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.

Marui Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marui Group Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Marui Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Marui Group

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

The idea behind Morgan Stanley Direct and Marui Group Co 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.