Correlation Between Morgan Stanley and Plus500

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Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Plus500 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 Plus500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Plus500, you can compare the effects of market volatilities on Morgan Stanley and Plus500 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 Plus500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Plus500.

Diversification Opportunities for Morgan Stanley and Plus500

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Morgan and Plus500 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Plus500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plus500 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 Plus500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plus500 has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Plus500 go up and down completely randomly.

Pair Corralation between Morgan Stanley and Plus500

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 0.76 times more return on investment than Plus500. However, Morgan Stanley is 1.32 times less risky than Plus500. It trades about -0.22 of its potential returns per unit of risk. Plus500 is currently generating about -0.22 per unit of risk. If you would invest  8,617  in Morgan Stanley on July 3, 2022 and sell it today you would lose (716.00)  from holding Morgan Stanley or give up 8.31% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Morgan Stanley  vs.  Plus500

 Performance (%) 
       Timeline  
Morgan Stanley 
Morgan Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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

Plus500 
Plus500 Performance
0 of 100
Over the last 90 days Plus500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Plus500 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Plus500 Price Channel

Morgan Stanley and Plus500 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morgan Stanley and Plus500

The main advantage of trading using opposite Morgan Stanley and Plus500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Plus500 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 Plus500 will offset losses from the drop in Plus500's long position.
Morgan Stanley vs. Amazon Inc
The idea behind Morgan Stanley and Plus500 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.
Plus500 vs. Amazon Inc
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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