Correlation Between Morgan Stanley and Cabot Oil

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Cabot Oil 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 Cabot Oil 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 Cabot Oil Gas, you can compare the effects of market volatilities on Morgan Stanley and Cabot Oil 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 Cabot Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Cabot Oil.

Diversification Opportunities for Morgan Stanley and Cabot Oil

0.0

Correlation Coefficient

Morgan Stanley  Cabot Oil

Pay attention - limited upside

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

Pair Corralation between Morgan Stanley and Cabot Oil

If you would invest  2,098  in Morgan Stanley Direct on September 29, 2024 and sell it today you would earn a total of  37.00  from holding Morgan Stanley Direct or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Cabot Oil Gas

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cabot Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabot Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cabot Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and Cabot Oil

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

The idea behind Morgan Stanley Direct and Cabot Oil Gas 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.