Correlation Between Morgan Stanley and National Drilling

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

Diversification Opportunities for Morgan Stanley and National Drilling

0.0

Correlation Coefficient

Morgan Stanley  National Drilling

Pay attention - limited upside

The 3 months correlation between Morgan and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and National Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Drilling 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 National Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Drilling has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and National Drilling go up and down completely randomly.

Pair Corralation between Morgan Stanley and National Drilling

If you would invest  1,907  in Morgan Stanley Direct on September 28, 2024 and sell it today you would earn a total of  194.00  from holding Morgan Stanley Direct or generate 10.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.17%
Values	Daily Returns

Morgan Stanley Direct  vs.  National Drilling

Morgan Stanley Direct

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) 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.

National Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, National Drilling 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 National Drilling

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

The idea behind Morgan Stanley Direct and National Drilling 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.