Correlation Between Morgan Stanley and Scientific Industries

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

Diversification Opportunities for Morgan Stanley and Scientific Industries

-0.28

Correlation Coefficient

Morgan Stanley  Scientific Industries

Very good diversification

The 3 months correlation between Morgan and Scientific is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Scientific Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Industries 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 Scientific Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Industries has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Scientific Industries go up and down completely randomly.

Pair Corralation between Morgan Stanley and Scientific Industries

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.26 times more return on investment than Scientific Industries. However, Morgan Stanley Direct is 3.78 times less risky than Scientific Industries. It trades about 0.02 of its potential returns per unit of risk. Scientific Industries is currently generating about -0.4 per unit of risk. If you would invest  2,059  in Morgan Stanley Direct on October 4, 2024 and sell it today you would earn a total of  7.00  from holding Morgan Stanley Direct or generate 0.34% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  Scientific Industries

Morgan Stanley Direct

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Scientific Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Morgan Stanley and Scientific Industries

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

The idea behind Morgan Stanley Direct and Scientific Industries 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.