Correlation Between Morgan Stanley and Oppenheimer Russell

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Oppenheimer Russell 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 Oppenheimer Russell 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 Oppenheimer Russell 1000, you can compare the effects of market volatilities on Morgan Stanley and Oppenheimer Russell 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 Oppenheimer Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Oppenheimer Russell.

Diversification Opportunities for Morgan Stanley and Oppenheimer Russell

0.13

Correlation Coefficient

Morgan Stanley  Oppenheimer Russell

Average diversification

The 3 months correlation between Morgan and Oppenheimer is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Oppenheimer Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Russell 1000 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 Oppenheimer Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Russell 1000 has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Oppenheimer Russell go up and down completely randomly.

Pair Corralation between Morgan Stanley and Oppenheimer Russell

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Oppenheimer Russell. In addition to that, Morgan Stanley is 1.05 times more volatile than Oppenheimer Russell 1000. It trades about -0.15 of its total potential returns per unit of risk. Oppenheimer Russell 1000 is currently generating about -0.14 per unit of volatility. If you would invest  5,624  in Oppenheimer Russell 1000 on December 5, 2024 and sell it today you would lose (140.00) from holding Oppenheimer Russell 1000 or give up 2.49% of portfolio value over 90 days.

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

Morgan Stanley Direct  vs.  Oppenheimer Russell 1000

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.

Oppenheimer Russell 1000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oppenheimer Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Oppenheimer Russell is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Morgan Stanley and Oppenheimer Russell

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

The idea behind Morgan Stanley Direct and Oppenheimer Russell 1000 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.