Correlation Between Morgan Stanley and Egyptian Media

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

Diversification Opportunities for Morgan Stanley and Egyptian Media

-0.39

Correlation Coefficient

Morgan Stanley  Egyptian Media

Very good diversification

The 3 months correlation between Morgan and Egyptian is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Egyptian Media Production in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Media Production 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 Egyptian Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Media Production has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Egyptian Media go up and down completely randomly.

Pair Corralation between Morgan Stanley and Egyptian Media

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Egyptian Media. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 2.03 times less risky than Egyptian Media. The stock trades about -0.15 of its potential returns per unit of risk. The Egyptian Media Production is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,336  in Egyptian Media Production on December 5, 2024 and sell it today you would lose (58.00) from holding Egyptian Media Production or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Morgan Stanley Direct  vs.  Egyptian Media Production

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

Egyptian Media Production

Risk-Adjusted Performance

Very Weak

Over the last 90 days Egyptian Media Production has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Morgan Stanley and Egyptian Media

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

The idea behind Morgan Stanley Direct and Egyptian Media Production 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.