Correlation Between Morgan Stanley and Cal Bay

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

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

Diversification Opportunities for Morgan Stanley and Cal Bay

0.0

Correlation Coefficient

Morgan Stanley  Cal Bay

Pay attention - limited upside

The 3 months correlation between Morgan and Cal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Cal Bay Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Bay Intl 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 Cal Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Bay Intl has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Cal Bay go up and down completely randomly.

Pair Corralation between Morgan Stanley and Cal Bay

If you would invest  2,536  in Morgan Stanley on September 30, 2024 and sell it today you would earn a total of  6.00  from holding Morgan Stanley or generate 0.24% return on investment over 90 days.

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

Morgan Stanley  vs.  Cal Bay Intl

Morgan Stanley

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Morgan Stanley is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

Cal Bay Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cal Bay Intl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Cal Bay is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Morgan Stanley and Cal Bay

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

The idea behind Morgan Stanley and Cal Bay Intl 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .