Correlation Between Morgan Stanley and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Goldman Sachs Group, you can compare the effects of market volatilities on Morgan Stanley and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Goldman Sachs.
Diversification Opportunities for Morgan Stanley and Goldman Sachs
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Morgan and Goldman is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group 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 are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Goldman Sachs go up and down completely randomly.
Pair Corralation between Morgan Stanley and Goldman Sachs
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.94 times less return on investment than Goldman Sachs. In addition to that, Morgan Stanley is 1.07 times more volatile than Goldman Sachs Group. It trades about 0.02 of its total potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.05 per unit of volatility. If you would invest 30,571 in Goldman Sachs Group on January 24, 2024 and sell it today you would earn a total of 11,164 from holding Goldman Sachs Group or generate 36.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Goldman Sachs Group
Performance |
| Timeline |
| Morgan Stanley |
| Goldman Sachs Group |
Morgan Stanley and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Goldman Sachs
The main advantage of trading using opposite Morgan Stanley and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Morgan Stanley vs. JPMorgan Chase Co | Morgan Stanley vs. Wells Fargo | Morgan Stanley vs. Citigroup | Morgan Stanley vs. American Express |
| Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup | Goldman Sachs vs. American Express |
Check out your portfolio center.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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