Correlation Between SL Green and Morgan Stanley

Can any of the company-specific risk be diversified away by investing in both SL Green and Morgan Stanley 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 SL Green and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SL Green Realty and Morgan Stanley Direct, you can compare the effects of market volatilities on SL Green and Morgan Stanley 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 SL Green with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Morgan Stanley.

Diversification Opportunities for SL Green and Morgan Stanley

0.07

Correlation Coefficient

SL Green  Morgan Stanley

Significant diversification

The 3 months correlation between SLG and Morgan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct and SL Green 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 SL Green Realty are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Direct has no effect on the direction of SL Green i.e., SL Green and Morgan Stanley go up and down completely randomly.

Pair Corralation between SL Green and Morgan Stanley

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Morgan Stanley. In addition to that, SL Green is 2.03 times more volatile than Morgan Stanley Direct. It trades about -0.02 of its total potential returns per unit of risk. Morgan Stanley Direct is currently generating about 0.13 per unit of volatility. If you would invest  1,968  in Morgan Stanley Direct on September 29, 2024 and sell it today you would earn a total of  167.00  from holding Morgan Stanley Direct or generate 8.49% return on investment over 90 days.

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

SL Green Realty  vs.  Morgan Stanley Direct

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, SL Green is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with SL Green and Morgan Stanley

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

The idea behind SL Green Realty and Morgan Stanley Direct 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..