Correlation Between Morgan Stanley and Deutsche Boerse

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

Diversification Opportunities for Morgan Stanley and Deutsche Boerse

-0.1

Correlation Coefficient

Morgan Stanley  Deutsche Boerse

Good diversification

The 3 months correlation between Morgan and Deutsche is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Deutsche Boerse AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Boerse AG 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 Deutsche Boerse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Boerse AG has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Deutsche Boerse go up and down completely randomly.

Pair Corralation between Morgan Stanley and Deutsche Boerse

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.92 times more return on investment than Deutsche Boerse. However, Morgan Stanley Direct is 1.08 times less risky than Deutsche Boerse. It trades about 0.11 of its potential returns per unit of risk. Deutsche Boerse AG is currently generating about 0.06 per unit of risk. If you would invest  1,952  in Morgan Stanley Direct on September 19, 2024 and sell it today you would earn a total of  133.00  from holding Morgan Stanley Direct or generate 6.81% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  Deutsche Boerse AG

Morgan Stanley Direct

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Deutsche Boerse AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Boerse AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Deutsche Boerse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Deutsche Boerse

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

The idea behind Morgan Stanley Direct and Deutsche Boerse AG 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 Commodity Directory module to find actively traded commodities issued by global exchanges.