Correlation Between Walmart and Morgan Stanley

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

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

Diversification Opportunities for Walmart and Morgan Stanley

0.73

Correlation Coefficient

Walmart  Morgan Stanley

Poor diversification

The 3 months correlation between Walmart and Morgan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Morgan Stanley ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley ETF and Walmart 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 Walmart 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 ETF has no effect on the direction of Walmart i.e., Walmart and Morgan Stanley go up and down completely randomly.

Pair Corralation between Walmart and Morgan Stanley

Considering the 90-day investment horizon Walmart is expected to under-perform the Morgan Stanley. In addition to that, Walmart is 1.68 times more volatile than Morgan Stanley ETF. It trades about -0.07 of its total potential returns per unit of risk. Morgan Stanley ETF is currently generating about -0.09 per unit of volatility. If you would invest  7,355  in Morgan Stanley ETF on December 25, 2024 and sell it today you would lose (417.50) from holding Morgan Stanley ETF or give up 5.68% of portfolio value over 90 days.

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

Walmart  vs.  Morgan Stanley ETF

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Morgan Stanley ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Walmart and Morgan Stanley

The main advantage of trading using opposite Walmart and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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 Walmart and Morgan Stanley ETF 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.