Correlation Between Morgan Stanley and URU Metals

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

Diversification Opportunities for Morgan Stanley and URU Metals

0.54

Correlation Coefficient

Morgan Stanley  URU Metals

Very weak diversification

The 3 months correlation between Morgan and URU is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and URU Metals go up and down completely randomly.

Pair Corralation between Morgan Stanley and URU Metals

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the URU Metals. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 9.23 times less risky than URU Metals. The stock trades about -0.02 of its potential returns per unit of risk. The URU Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,000  in URU Metals on September 21, 2024 and sell it today you would earn a total of  11,000  from holding URU Metals or generate 220.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Morgan Stanley Direct  vs.  URU Metals

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

URU Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in URU Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, URU Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and URU Metals

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

The idea behind Morgan Stanley Direct and URU Metals 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..