Correlation Between Morgan Stanley and Super Energy

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

Diversification Opportunities for Morgan Stanley and Super Energy

-0.35

Correlation Coefficient

Morgan Stanley  Super Energy

Very good diversification

The 3 months correlation between Morgan and Super is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Super Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Energy 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 Super Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Energy has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Super Energy go up and down completely randomly.

Pair Corralation between Morgan Stanley and Super Energy

Given the investment horizon of 90 days Morgan Stanley is expected to generate 68.54 times less return on investment than Super Energy. But when comparing it to its historical volatility, Morgan Stanley Direct is 40.41 times less risky than Super Energy. It trades about 0.03 of its potential returns per unit of risk. Super Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Super Energy on December 2, 2024 and sell it today you would lose (12.00) from holding Super Energy or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.17%
Values	Daily Returns

Morgan Stanley Direct  vs.  Super Energy

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.

Super Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Super Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Morgan Stanley and Super Energy

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

The idea behind Morgan Stanley Direct and Super Energy 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.