Correlation Between Morgan Stanley and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Leverage Shares 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 Leverage Shares 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 Leverage Shares 3x, you can compare the effects of market volatilities on Morgan Stanley and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Leverage Shares.
Diversification Opportunities for Morgan Stanley and Leverage Shares
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and Leverage is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Leverage Shares go up and down completely randomly.
Pair Corralation between Morgan Stanley and Leverage Shares
Given the investment horizon of 90 days Morgan Stanley is expected to generate 3.44 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, Morgan Stanley Direct is 11.19 times less risky than Leverage Shares. It trades about 0.12 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,226 in Leverage Shares 3x on September 25, 2024 and sell it today you would lose (129.00) from holding Leverage Shares 3x or give up 10.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Morgan Stanley Direct vs. Leverage Shares 3x
Performance |
Timeline |
Morgan Stanley Direct |
Leverage Shares 3x |
Morgan Stanley and Leverage Shares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Leverage Shares
The main advantage of trading using opposite Morgan Stanley and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.Morgan Stanley vs. Avient Corp | Morgan Stanley vs. Eastman Chemical | Morgan Stanley vs. NL Industries | Morgan Stanley vs. Molson Coors Brewing |
Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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