Correlation Between Armada Mercantile and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Armada Mercantile 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 Armada Mercantile and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Mercantile and Morgan Stanley, you can compare the effects of market volatilities on Armada Mercantile 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 Armada Mercantile with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Mercantile and Morgan Stanley.
Diversification Opportunities for Armada Mercantile and Morgan Stanley
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Armada and Morgan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Armada Mercantile and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Armada Mercantile 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 Armada Mercantile 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 Armada Mercantile i.e., Armada Mercantile and Morgan Stanley go up and down completely randomly.
Pair Corralation between Armada Mercantile and Morgan Stanley
Assuming the 90 days horizon Armada Mercantile is expected to under-perform the Morgan Stanley. In addition to that, Armada Mercantile is 2.98 times more volatile than Morgan Stanley. It trades about -0.19 of its total potential returns per unit of risk. Morgan Stanley is currently generating about -0.02 per unit of volatility. If you would invest 9,135 in Morgan Stanley on January 20, 2024 and sell it today you would lose (109.00) from holding Morgan Stanley or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armada Mercantile vs. Morgan Stanley
Performance |
| Timeline |
| Armada Mercantile |
| Morgan Stanley |
Armada Mercantile and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Mercantile and Morgan Stanley
The main advantage of trading using opposite Armada Mercantile and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Mercantile 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.| Armada Mercantile vs. First Tractor | Armada Mercantile vs. Ag Growth International | Armada Mercantile vs. AmeraMex International | Armada Mercantile vs. Arts Way Manufacturing Co |
| Morgan Stanley vs. JPMorgan Chase Co | Morgan Stanley vs. Wells Fargo | Morgan Stanley vs. Citigroup | Morgan Stanley 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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