Correlation Between Morgan Stanley and Screaming Eagle

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

Diversification Opportunities for Morgan Stanley and Screaming Eagle

0.87

Correlation Coefficient

Morgan Stanley  Screaming Eagle

Very poor diversification

The 3 months correlation between Morgan and Screaming is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Screaming Eagle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Screaming Eagle Acqu 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 Screaming Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Screaming Eagle Acqu has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Screaming Eagle go up and down completely randomly.

Pair Corralation between Morgan Stanley and Screaming Eagle

If you would invest  1,953  in Morgan Stanley Direct on September 16, 2024 and sell it today you would earn a total of  165.00  from holding Morgan Stanley Direct or generate 8.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.54%
Values	Daily Returns

Morgan Stanley Direct  vs.  Screaming Eagle Acquisition

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 unfluctuating fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Screaming Eagle Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Screaming Eagle Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Screaming Eagle is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Screaming Eagle

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

The idea behind Morgan Stanley Direct and Screaming Eagle Acquisition 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..