Correlation Between Morgan Stanley and BGC Partners

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Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and BGC Partners 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 BGC Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and BGC Partners, you can compare the effects of market volatilities on Morgan Stanley and BGC Partners 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 BGC Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and BGC Partners.

Diversification Opportunities for Morgan Stanley and BGC Partners

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Morgan and BGC Partners is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and BGC Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Partners 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 BGC Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGC Partners has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and BGC Partners go up and down completely randomly.

Pair Corralation between Morgan Stanley and BGC Partners

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.29 times less return on investment than BGC Partners. But when comparing it to its historical volatility, Morgan Stanley is 1.41 times less risky than BGC Partners. It trades about 0.17 of its potential returns per unit of risk. BGC Partners is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  376.00  in BGC Partners on September 10, 2022 and sell it today you would earn a total of  73.00  from holding BGC Partners or generate 19.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Morgan Stanley  vs.  BGC Partners

 Performance (%) 
       Timeline  
Morgan Stanley 
Morgan Performance
0 of 100
Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Morgan Price Channel

BGC Partners 
BGC Partners Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BGC Partners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, BGC Partners may actually be approaching a critical reversion point that can send shares even higher in January 2023.

BGC Partners Price Channel

Morgan Stanley and BGC Partners Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morgan Stanley and BGC Partners

The main advantage of trading using opposite Morgan Stanley and BGC Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, BGC Partners 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 BGC Partners will offset losses from the drop in BGC Partners' long position.
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The idea behind Morgan Stanley and BGC Partners 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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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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