Correlation Between Morgan Stanley and HIAG Immobilien

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

Diversification Opportunities for Morgan Stanley and HIAG Immobilien

0.47

Correlation Coefficient

Morgan Stanley  HIAG Immobilien

Very weak diversification

The 3 months correlation between Morgan and HIAG is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and HIAG Immobilien Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIAG Immobilien Holding 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 HIAG Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIAG Immobilien Holding has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and HIAG Immobilien go up and down completely randomly.

Pair Corralation between Morgan Stanley and HIAG Immobilien

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.38 times more return on investment than HIAG Immobilien. However, Morgan Stanley is 1.38 times more volatile than HIAG Immobilien Holding. It trades about 0.24 of its potential returns per unit of risk. HIAG Immobilien Holding is currently generating about 0.19 per unit of risk. If you would invest  2,029  in Morgan Stanley Direct on September 14, 2024 and sell it today you would earn a total of  101.00  from holding Morgan Stanley Direct or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Morgan Stanley Direct  vs.  HIAG Immobilien Holding

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.

HIAG Immobilien Holding

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HIAG Immobilien Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, HIAG Immobilien 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 HIAG Immobilien

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

The idea behind Morgan Stanley Direct and HIAG Immobilien Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.