Correlation Between Morgan Stanley and Raiffeisen Bank

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

Diversification Opportunities for Morgan Stanley and Raiffeisen Bank

0.01

Correlation Coefficient

Morgan Stanley  Raiffeisen Bank

Significant diversification

The 3 months correlation between Morgan and Raiffeisen is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Raiffeisen Bank International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiffeisen Bank Inte 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 Raiffeisen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiffeisen Bank Inte has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Raiffeisen Bank go up and down completely randomly.

Pair Corralation between Morgan Stanley and Raiffeisen Bank

Given the investment horizon of 90 days Morgan Stanley is expected to generate 35.14 times less return on investment than Raiffeisen Bank. But when comparing it to its historical volatility, Morgan Stanley Direct is 2.84 times less risky than Raiffeisen Bank. It trades about 0.01 of its potential returns per unit of risk. Raiffeisen Bank International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  462.00  in Raiffeisen Bank International on September 25, 2024 and sell it today you would earn a total of  48.00  from holding Raiffeisen Bank International or generate 10.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Raiffeisen Bank International

Morgan Stanley Direct

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 9 (%) 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.

Raiffeisen Bank Inte

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Raiffeisen Bank International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Raiffeisen Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Raiffeisen Bank

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

The idea behind Morgan Stanley Direct and Raiffeisen Bank International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.