Correlation Between Morgan Stanley and Exchange Listed

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

Diversification Opportunities for Morgan Stanley and Exchange Listed

0.55

Correlation Coefficient

Morgan Stanley  Exchange Listed

Very weak diversification

The 3 months correlation between Morgan and Exchange is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds 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 Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Exchange Listed go up and down completely randomly.

Pair Corralation between Morgan Stanley and Exchange Listed

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.64 times more return on investment than Exchange Listed. However, Morgan Stanley is 1.64 times more volatile than Exchange Listed Funds. It trades about 0.01 of its potential returns per unit of risk. Exchange Listed Funds is currently generating about -0.43 per unit of risk. If you would invest  2,134  in Morgan Stanley Direct on September 29, 2024 and sell it today you would earn a total of  1.00  from holding Morgan Stanley Direct or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Morgan Stanley Direct  vs.  Exchange Listed Funds

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 uncertain fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Exchange Listed Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Listed Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Exchange Listed is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Morgan Stanley and Exchange Listed

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

The idea behind Morgan Stanley Direct and Exchange Listed Funds 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.