Correlation Between Morgan Stanley and Athena Bitcoin

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

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

Diversification Opportunities for Morgan Stanley and Athena Bitcoin

0.79

Correlation Coefficient

Morgan Stanley  Athena Bitcoin

Poor diversification

The 3 months correlation between Morgan and Athena is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Athena Bitcoin Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athena Bitcoin Global 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 Athena Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athena Bitcoin Global has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Athena Bitcoin go up and down completely randomly.

Pair Corralation between Morgan Stanley and Athena Bitcoin

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 10.03 times less return on investment than Athena Bitcoin. But when comparing it to its historical volatility, Morgan Stanley is 9.13 times less risky than Athena Bitcoin. It trades about 0.14 of its potential returns per unit of risk. Athena Bitcoin Global is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4.30  in Athena Bitcoin Global on September 21, 2024 and sell it today you would earn a total of  6.70  from holding Athena Bitcoin Global or generate 155.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Morgan Stanley  vs.  Athena Bitcoin Global

Morgan Stanley

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Athena Bitcoin Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Athena Bitcoin Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward indicators, Athena Bitcoin unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Athena Bitcoin

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

The idea behind Morgan Stanley and Athena Bitcoin Global 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.