Correlation Between Morgan Stanley and Virtus Senior

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

Diversification Opportunities for Morgan Stanley and Virtus Senior

0.79

Correlation Coefficient

Morgan Stanley  Virtus Senior

Poor diversification

The 3 months correlation between Morgan and Virtus is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Virtus Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Senior Floating 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 Virtus Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Senior Floating has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Virtus Senior go up and down completely randomly.

Pair Corralation between Morgan Stanley and Virtus Senior

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 11.47 times more return on investment than Virtus Senior. However, Morgan Stanley is 11.47 times more volatile than Virtus Senior Floating. It trades about 0.04 of its potential returns per unit of risk. Virtus Senior Floating is currently generating about 0.16 per unit of risk. If you would invest  1,862  in Morgan Stanley Direct on October 7, 2024 and sell it today you would earn a total of  220.00  from holding Morgan Stanley Direct or generate 11.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Morgan Stanley Direct  vs.  Virtus Senior Floating

Morgan Stanley Direct

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 9 (%) 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 February 2025.

Virtus Senior Floating

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Senior Floating are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Virtus Senior

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

The idea behind Morgan Stanley Direct and Virtus Senior Floating 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.