Correlation Between Morgan Stanley and Kasten

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

Diversification Opportunities for Morgan Stanley and Kasten

-0.27

Correlation Coefficient

Morgan Stanley  Kasten

Very good diversification

The 3 months correlation between Morgan and Kasten is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Kasten Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kasten Inc 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 Kasten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kasten Inc has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Kasten go up and down completely randomly.

Pair Corralation between Morgan Stanley and Kasten

Given the investment horizon of 90 days Morgan Stanley is expected to generate 17.25 times less return on investment than Kasten. But when comparing it to its historical volatility, Morgan Stanley Direct is 10.56 times less risky than Kasten. It trades about 0.04 of its potential returns per unit of risk. Kasten Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.49  in Kasten Inc on September 27, 2024 and sell it today you would lose (1.89) from holding Kasten Inc or give up 75.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.27%
Values	Daily Returns

Morgan Stanley Direct  vs.  Kasten Inc

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.

Kasten Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kasten Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Kasten unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Kasten

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

The idea behind Morgan Stanley Direct and Kasten Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.