Correlation Between Morgan Stanley and Gabelli Global

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

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

Diversification Opportunities for Morgan Stanley and Gabelli Global

0.62

Correlation Coefficient

Morgan Stanley  Gabelli Global

Poor diversification

The 3 months correlation between Morgan and Gabelli is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Gabelli Global Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Utility 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 Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Utility has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Gabelli Global go up and down completely randomly.

Pair Corralation between Morgan Stanley and Gabelli Global

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.6 times more return on investment than Gabelli Global. However, Morgan Stanley is 1.6 times more volatile than Gabelli Global Utility. It trades about 0.2 of its potential returns per unit of risk. Gabelli Global Utility is currently generating about 0.06 per unit of risk. If you would invest  9,930  in Morgan Stanley on September 15, 2024 and sell it today you would earn a total of  2,810  from holding Morgan Stanley or generate 28.3% return on investment over 90 days.

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

Morgan Stanley  vs.  Gabelli Global Utility

Morgan Stanley

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gabelli Global Utility

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Utility are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Gabelli Global is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Morgan Stanley and Gabelli Global

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

The idea behind Morgan Stanley and Gabelli Global Utility 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.