Correlation Between Neptune Digital and Morgan Stanley

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

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

Diversification Opportunities for Neptune Digital and Morgan Stanley

0.82

Correlation Coefficient

Neptune Digital  Morgan Stanley

Very poor diversification

The 3 months correlation between Neptune and Morgan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Neptune Digital Assets and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Neptune Digital 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 Neptune Digital Assets 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 Neptune Digital i.e., Neptune Digital and Morgan Stanley go up and down completely randomly.

Pair Corralation between Neptune Digital and Morgan Stanley

Assuming the 90 days horizon Neptune Digital Assets is expected to generate 7.16 times more return on investment than Morgan Stanley. However, Neptune Digital is 7.16 times more volatile than Morgan Stanley. It trades about 0.18 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.23 per unit of risk. If you would invest  19.00  in Neptune Digital Assets on August 31, 2024 and sell it today you would earn a total of  43.00  from holding Neptune Digital Assets or generate 226.32% return on investment over 90 days.

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

Neptune Digital Assets  vs.  Morgan Stanley

Neptune Digital Assets

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Neptune Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 18 (%) 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 Neptune Digital and Morgan Stanley

The main advantage of trading using opposite Neptune Digital and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neptune Digital 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 Neptune Digital Assets 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 Commodity Directory module to find actively traded commodities issued by global exchanges.