Correlation Between Morgan Stanley and Nomura Research

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

Diversification Opportunities for Morgan Stanley and Nomura Research

-0.64

Correlation Coefficient

Morgan Stanley  Nomura Research

Excellent diversification

The 3 months correlation between Morgan and Nomura is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Nomura Research Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Research Institute 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 Nomura Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Research Institute has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Nomura Research go up and down completely randomly.

Pair Corralation between Morgan Stanley and Nomura Research

Given the investment horizon of 90 days Morgan Stanley is expected to generate 52.23 times less return on investment than Nomura Research. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.22 times less risky than Nomura Research. It trades about 0.0 of its potential returns per unit of risk. Nomura Research Institute is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,685  in Nomura Research Institute on September 16, 2024 and sell it today you would earn a total of  355.00  from holding Nomura Research Institute or generate 13.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Nomura Research Institute

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nomura Research Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomura Research Institute has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Morgan Stanley and Nomura Research

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

The idea behind Morgan Stanley Direct and Nomura Research Institute 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 Global Correlations module to find global opportunities by holding instruments from different markets.