Correlation Between Reaves Utility and Morgan Stanley

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

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

Diversification Opportunities for Reaves Utility and Morgan Stanley

0.11

Correlation Coefficient

Reaves Utility  Morgan Stanley

Average diversification

The 3 months correlation between Reaves and Morgan is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Reaves Utility If and Morgan Stanley China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley China and Reaves Utility 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 Reaves Utility If 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 China has no effect on the direction of Reaves Utility i.e., Reaves Utility and Morgan Stanley go up and down completely randomly.

Pair Corralation between Reaves Utility and Morgan Stanley

Considering the 90-day investment horizon Reaves Utility If is expected to generate 0.62 times more return on investment than Morgan Stanley. However, Reaves Utility If is 1.61 times less risky than Morgan Stanley. It trades about 0.27 of its potential returns per unit of risk. Morgan Stanley China is currently generating about -0.01 per unit of risk. If you would invest  2,520  in Reaves Utility If on February 19, 2024 and sell it today you would earn a total of  304.00  from holding Reaves Utility If or generate 12.06% return on investment over 90 days.

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

Reaves Utility If  vs.  Morgan Stanley China

Reaves Utility If

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Reaves Utility If are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly weak basic indicators, Reaves Utility may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Morgan Stanley China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley China has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Reaves Utility and Morgan Stanley

The main advantage of trading using opposite Reaves Utility and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reaves Utility 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 Reaves Utility If and Morgan Stanley China 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.