Correlation Between Morgan Stanley and Schweiter Technologies

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

Diversification Opportunities for Morgan Stanley and Schweiter Technologies

0.51

Correlation Coefficient

Morgan Stanley  Schweiter Technologies

Very weak diversification

The 3 months correlation between Morgan and Schweiter is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Morgan Stanley and Schweiter Technologies

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Schweiter Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 2.06 times less risky than Schweiter Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Schweiter Technologies AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  40,650  in Schweiter Technologies AG on December 4, 2024 and sell it today you would earn a total of  2,000  from holding Schweiter Technologies AG or generate 4.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Morgan Stanley Direct  vs.  Schweiter Technologies AG

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.

Schweiter Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Schweiter Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Morgan Stanley and Schweiter Technologies

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

The idea behind Morgan Stanley Direct and Schweiter Technologies AG 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.