Correlation Between Western Acquisition and Morgan Stanley

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

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

Diversification Opportunities for Western Acquisition and Morgan Stanley

0.39

Correlation Coefficient

Western Acquisition  Morgan Stanley

Weak diversification

The 3 months correlation between Western and Morgan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Morgan Stanley go up and down completely randomly.

Pair Corralation between Western Acquisition and Morgan Stanley

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 1.32 times more return on investment than Morgan Stanley. However, Western Acquisition is 1.32 times more volatile than Morgan Stanley. It trades about -0.11 of its potential returns per unit of risk. Morgan Stanley is currently generating about -0.23 per unit of risk. If you would invest  1,133  in Western Acquisition Ventures on September 19, 2024 and sell it today you would lose (33.00) from holding Western Acquisition Ventures or give up 2.91% of portfolio value over 90 days.

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

Western Acquisition Ventures  vs.  Morgan Stanley

Western Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Morgan Stanley

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Acquisition and Morgan Stanley

The main advantage of trading using opposite Western Acquisition and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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 Western Acquisition Ventures 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.