Correlation Between Morgan Stanley and NSAV Holding

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

By analyzing existing cross correlation between Morgan Stanley and NSAV Holding, you can compare the effects of market volatilities on Morgan Stanley and NSAV Holding 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 NSAV Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and NSAV Holding.

Diversification Opportunities for Morgan Stanley and NSAV Holding

-0.21

Correlation Coefficient

Morgan Stanley  NSAV Holding

Very good diversification

The 3 months correlation between Morgan and NSAV is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and NSAV Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSAV Holding 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 NSAV Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSAV Holding has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and NSAV Holding go up and down completely randomly.

Pair Corralation between Morgan Stanley and NSAV Holding

Assuming the 90 days horizon Morgan Stanley is expected to generate 95.4 times less return on investment than NSAV Holding. But when comparing it to its historical volatility, Morgan Stanley is 25.48 times less risky than NSAV Holding. It trades about 0.14 of its potential returns per unit of risk. NSAV Holding is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest  0.28  in NSAV Holding on February 21, 2024 and sell it today you would earn a total of  1.36  from holding NSAV Holding or generate 485.71% return on investment over 90 days.

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

Morgan Stanley  vs.  NSAV Holding

Morgan Stanley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

NSAV Holding

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NSAV Holding are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, NSAV Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and NSAV Holding

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

The idea behind Morgan Stanley and NSAV Holding 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.