Correlation Between HF Sinclair and Morgan Stanley

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

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

Diversification Opportunities for HF Sinclair and Morgan Stanley

-0.53

Correlation Coefficient

HF Sinclair  Morgan Stanley

Excellent diversification

The 3 months correlation between DINO and Morgan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and HF Sinclair 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 HF Sinclair Corp 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 HF Sinclair i.e., HF Sinclair and Morgan Stanley go up and down completely randomly.

Pair Corralation between HF Sinclair and Morgan Stanley

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the Morgan Stanley. But the stock apears to be less risky and, when comparing its historical volatility, HF Sinclair Corp is 1.0 times less risky than Morgan Stanley. The stock trades about -0.19 of its potential returns per unit of risk. The Morgan Stanley is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10,378  in Morgan Stanley on September 26, 2024 and sell it today you would earn a total of  2,328  from holding Morgan Stanley or generate 22.43% return on investment over 90 days.

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

HF Sinclair Corp  vs.  Morgan Stanley

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Morgan Stanley

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HF Sinclair and Morgan Stanley

The main advantage of trading using opposite HF Sinclair and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair 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 HF Sinclair Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.