Correlation Between Morgan Stanley and Dundee Precious

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

Diversification Opportunities for Morgan Stanley and Dundee Precious

-0.66

Correlation Coefficient

Morgan Stanley  Dundee Precious

Excellent diversification

The 3 months correlation between Morgan and Dundee is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals 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 Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Dundee Precious go up and down completely randomly.

Pair Corralation between Morgan Stanley and Dundee Precious

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.09 times less return on investment than Dundee Precious. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.71 times less risky than Dundee Precious. It trades about 0.24 of its potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  892.00  in Dundee Precious Metals on September 14, 2024 and sell it today you would earn a total of  47.00  from holding Dundee Precious Metals or generate 5.27% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  Dundee Precious Metals

Morgan Stanley Direct

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 11 (%) 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.

Dundee Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Morgan Stanley and Dundee Precious

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

The idea behind Morgan Stanley Direct and Dundee Precious Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.