Correlation Between Cathedra Bitcoin and Morgan Stanley

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

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

Diversification Opportunities for Cathedra Bitcoin and Morgan Stanley

-0.22

Correlation Coefficient

Cathedra Bitcoin  Morgan Stanley

Very good diversification

The 3 months correlation between Cathedra and Morgan is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cathedra Bitcoin and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Cathedra Bitcoin 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 Cathedra Bitcoin 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 has no effect on the direction of Cathedra Bitcoin i.e., Cathedra Bitcoin and Morgan Stanley go up and down completely randomly.

Pair Corralation between Cathedra Bitcoin and Morgan Stanley

Assuming the 90 days horizon Cathedra Bitcoin is expected to generate 2.51 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Cathedra Bitcoin is 2.27 times less risky than Morgan Stanley. It trades about 0.1 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,922  in Morgan Stanley on March 3, 2024 and sell it today you would earn a total of  862.00  from holding Morgan Stanley or generate 9.66% return on investment over 90 days.

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

Cathedra Bitcoin  vs.  Morgan Stanley

Cathedra Bitcoin

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cathedra Bitcoin are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cathedra Bitcoin is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Morgan Stanley

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Cathedra Bitcoin and Morgan Stanley

The main advantage of trading using opposite Cathedra Bitcoin and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathedra Bitcoin 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 Cathedra Bitcoin and Morgan Stanley 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.