Correlation Between Morgan Stanley and Retail Holdings

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

Diversification Opportunities for Morgan Stanley and Retail Holdings

0.0

Correlation Coefficient

Morgan Stanley  Retail Holdings

Pay attention - limited upside

The 3 months correlation between Morgan and Retail is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Retail Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Holdings NV 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 Retail Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Holdings NV has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Retail Holdings go up and down completely randomly.

Pair Corralation between Morgan Stanley and Retail Holdings

If you would invest  1,862  in Morgan Stanley Direct on December 2, 2024 and sell it today you would earn a total of  162.00  from holding Morgan Stanley Direct or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Retail Holdings NV

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

Retail Holdings NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Retail Holdings NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Retail Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and Retail Holdings

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

The idea behind Morgan Stanley Direct and Retail Holdings NV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.