Correlation Between Morgan Stanley and New York

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

By analyzing existing cross correlation between Morgan Stanley and New York Mortgage, you can compare the effects of market volatilities on Morgan Stanley and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and New York.

Diversification Opportunities for Morgan Stanley and New York

-0.73

Correlation Coefficient

Morgan Stanley  New York

Pay attention - limited upside

The 3 months correlation between Morgan and New is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and New York Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Mortgage 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 are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Mortgage has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and New York go up and down completely randomly.

Pair Corralation between Morgan Stanley and New York

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 0.5 times more return on investment than New York. However, Morgan Stanley is 2.01 times less risky than New York. It trades about 0.22 of its potential returns per unit of risk. New York Mortgage is currently generating about -0.09 per unit of risk. If you would invest  9,364  in Morgan Stanley on March 4, 2024 and sell it today you would earn a total of  420.00  from holding Morgan Stanley or generate 4.49% return on investment over 90 days.

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

Morgan Stanley  vs.  New York Mortgage

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.

New York Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New York Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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.

Pair Trading with Morgan Stanley and New York

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

The idea behind Morgan Stanley and New York Mortgage 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.