Correlation Between Morgan Stanley and QT Imaging

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

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

Diversification Opportunities for Morgan Stanley and QT Imaging

-0.57

Correlation Coefficient

Morgan Stanley  QT Imaging

Excellent diversification

The 3 months correlation between Morgan and QTI is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and QT Imaging Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QT Imaging Holdings 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 QT Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QT Imaging Holdings has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and QT Imaging go up and down completely randomly.

Pair Corralation between Morgan Stanley and QT Imaging

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 0.28 times more return on investment than QT Imaging. However, Morgan Stanley is 3.52 times less risky than QT Imaging. It trades about 0.2 of its potential returns per unit of risk. QT Imaging Holdings is currently generating about -0.01 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley  vs.  QT Imaging Holdings

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.

QT Imaging Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QT Imaging Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, QT Imaging 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 QT Imaging

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

The idea behind Morgan Stanley and QT Imaging Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.