Correlation Between Morgan Stanley and SPECTRA

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

Diversification Opportunities for Morgan Stanley and SPECTRA

MorganSPECTRADiversified AwayMorganSPECTRADiversified Away100%
-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Morgan and SPECTRA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and SPECTRA ENERGY PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRA ENERGY PARTNERS 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 SPECTRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRA ENERGY PARTNERS has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and SPECTRA go up and down completely randomly.

Pair Corralation between Morgan Stanley and SPECTRA

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.21 times more return on investment than SPECTRA. However, Morgan Stanley is 1.21 times more volatile than SPECTRA ENERGY PARTNERS. It trades about 0.13 of its potential returns per unit of risk. SPECTRA ENERGY PARTNERS is currently generating about -0.09 per unit of risk. If you would invest  1,977  in Morgan Stanley Direct on October 1, 2024 and sell it today you would earn a total of  158.00  from holding Morgan Stanley Direct or generate 7.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy96.83%
ValuesDaily Returns

Morgan Stanley Direct  vs.  SPECTRA ENERGY PARTNERS

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510
JavaScript chart by amCharts 3.21.15MSDL 84756NAH2
       Timeline  
Morgan Stanley Direct 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
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 unsteady fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15NovDecDec19.52020.52121.5
SPECTRA ENERGY PARTNERS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SPECTRA ENERGY PARTNERS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SPECTRA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.153023402431236024939495969798

Morgan Stanley and SPECTRA Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.04-2.28-1.51-0.750.00.81.632.453.284.11 0.10.20.30.4
JavaScript chart by amCharts 3.21.15MSDL 84756NAH2
       Returns  

Pair Trading with Morgan Stanley and SPECTRA

The main advantage of trading using opposite Morgan Stanley and SPECTRA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, SPECTRA 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 SPECTRA will offset losses from the drop in SPECTRA's long position.
The idea behind Morgan Stanley Direct and SPECTRA ENERGY PARTNERS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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