Correlation Between Macquarie Group and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Macquarie Group 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 Macquarie Group and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group Limited and Morgan Stanley, you can compare the effects of market volatilities on Macquarie Group 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 Macquarie Group with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Morgan Stanley.
Diversification Opportunities for Macquarie Group and Morgan Stanley
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Macquarie and Morgan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Limited and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Macquarie Group 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 Macquarie Group Limited 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 Macquarie Group i.e., Macquarie Group and Morgan Stanley go up and down completely randomly.
Pair Corralation between Macquarie Group and Morgan Stanley
Assuming the 90 days horizon Macquarie Group Limited is expected to under-perform the Morgan Stanley. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Group Limited is 1.82 times less risky than Morgan Stanley. The stock trades about -0.05 of its potential returns per unit of risk. The Morgan Stanley is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 9,175 in Morgan Stanley on September 23, 2024 and sell it today you would earn a total of 2,655 from holding Morgan Stanley or generate 28.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Macquarie Group Limited vs. Morgan Stanley
Performance |
Timeline |
Macquarie Group |
Morgan Stanley |
Macquarie Group and Morgan Stanley Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macquarie Group and Morgan Stanley
The main advantage of trading using opposite Macquarie Group and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group 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.Macquarie Group vs. Morgan Stanley | Macquarie Group vs. Morgan Stanley | Macquarie Group vs. The Charles Schwab | Macquarie Group vs. The Goldman Sachs |
Morgan Stanley vs. Morgan Stanley | Morgan Stanley vs. The Charles Schwab | Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. The Goldman Sachs |
Check out your portfolio center.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 Valuation module to check real value of public entities based on technical and fundamental data.
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