Correlation Between Morgan Stanley and Chavant Capital

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

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

Diversification Opportunities for Morgan Stanley and Chavant Capital

-0.45

Correlation Coefficient

Morgan Stanley  Chavant Capital

Very good diversification

The 3 months correlation between Morgan and Chavant is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Chavant Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chavant Capital Acqu 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 Direct are associated (or correlated) with Chavant Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chavant Capital Acqu has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Chavant Capital go up and down completely randomly.

Pair Corralation between Morgan Stanley and Chavant Capital

Given the investment horizon of 90 days Morgan Stanley is expected to generate 12.77 times less return on investment than Chavant Capital. But when comparing it to its historical volatility, Morgan Stanley Direct is 11.93 times less risky than Chavant Capital. It trades about 0.04 of its potential returns per unit of risk. Chavant Capital Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9.86  in Chavant Capital Acquisition on September 13, 2024 and sell it today you would lose (5.60) from holding Chavant Capital Acquisition or give up 56.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	38.39%
Values	Daily Returns

Morgan Stanley Direct  vs.  Chavant Capital Acquisition

Morgan Stanley Direct

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Chavant Capital Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chavant Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chavant Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Morgan Stanley and Chavant Capital

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

The idea behind Morgan Stanley Direct and Chavant Capital Acquisition 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.