Correlation Between Morgan Stanley and GNS

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

Diversification Opportunities for Morgan Stanley and GNS

-0.66

Correlation Coefficient

Morgan Stanley  GNS

Excellent diversification

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

Pair Corralation between Morgan Stanley and GNS

Given the investment horizon of 90 days Morgan Stanley is expected to generate 2.11 times less return on investment than GNS. But when comparing it to its historical volatility, Morgan Stanley Direct is 9.15 times less risky than GNS. It trades about 0.03 of its potential returns per unit of risk. The GNS Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  14,000  in The GNS Group on September 20, 2024 and sell it today you would lose (13,890) from holding The GNS Group or give up 99.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	46.08%
Values	Daily Returns

Morgan Stanley Direct  vs.  The GNS Group

Morgan Stanley Direct

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

GNS Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The GNS Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Morgan Stanley and GNS

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

The idea behind Morgan Stanley Direct and The GNS Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.