Correlation Between Meyer Burger and Morgan Stanley

Can any of the company-specific risk be diversified away by investing in both Meyer Burger and Morgan Stanley 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 Meyer Burger and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Meyer Burger Technology and Morgan Stanley, you can compare the effects of market volatilities on Meyer Burger and Morgan Stanley 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 Meyer Burger with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meyer Burger and Morgan Stanley.

Diversification Opportunities for Meyer Burger and Morgan Stanley

-0.57

Correlation Coefficient

Meyer Burger  Morgan Stanley

Excellent diversification

The 3 months correlation between Meyer and Morgan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Meyer Burger Technology and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Meyer Burger 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 Meyer Burger Technology are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of Meyer Burger i.e., Meyer Burger and Morgan Stanley go up and down completely randomly.

Pair Corralation between Meyer Burger and Morgan Stanley

Assuming the 90 days horizon Meyer Burger Technology is expected to generate 104.64 times more return on investment than Morgan Stanley. However, Meyer Burger is 104.64 times more volatile than Morgan Stanley. It trades about 0.15 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.1 per unit of risk. If you would invest  17,588  in Meyer Burger Technology on September 13, 2024 and sell it today you would lose (17,293) from holding Meyer Burger Technology or give up 98.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Meyer Burger Technology  vs.  Morgan Stanley

Meyer Burger Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meyer Burger Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Meyer Burger reported solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meyer Burger and Morgan Stanley

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

The idea behind Meyer Burger Technology and Morgan Stanley 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.