The backtest results show that MS has a low short-term win rate of 41.67% over 3 days and 50.00% over 10 days following earnings beats, with negative average returns in these periods. However, the 30-day win rate improves to 58.33%, and the average return turns slightly positive at 0.71%. This indicates a delayed positive market reaction to MS earnings beats.

The analysis suggests that immediate post-earnings gains are weak or negative, but holding MS for a month may yield modest positive returns.

Investors might consider a longer-term holding strategy after MS earnings beats rather than expecting quick gains.

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The backtest results show that MS has a low 3-day win rate of 33.33% and a negative average return of -0.63% shortly after earnings misses. Over 10 and 30 days, the win rates fluctuate, but the overall returns remain negative, reaching -1.52% at 30 days. This indicates a generally adverse market reaction to MS earnings misses.

The data suggests that MS stock tends to underperform following earnings misses, with limited recovery within a month. Investors should be cautious and consider the potential downside risk when MS reports earnings below expectations.

This pattern highlights the importance of risk management and possibly avoiding or shorting MS after earnings misses.

The backtest results show that the Capital Markets Industry experienced no significant impact following earnings beats, with a maximum return of only 0.56% on the event day. This indicates that earnings beats in this sector do not translate into meaningful price movements or sustained gains. Consequently, investors should be cautious about expecting strong market reactions or alpha generation solely based on earnings beats within the Capital Markets Industry.

The backtest results show that earnings misses in the Capital Markets Industry had no significant impact, with a maximum return of only 2.30% observed 55 days after the event. This indicates that the industry’s stock prices are largely resilient or indifferent to earnings misses over the tested period.

The lack of notable price movement suggests that investors may have already priced in such earnings disappointments or that other factors dominate market reactions in this sector.

For investors, this implies limited trading advantage from reacting solely to earnings misses within the Capital Markets Industry.

The backtest results show a clear positive impact on the Banks industry following Morgan Stanley's earnings beat, with sustained gains over 52 days. This indicates strong investor confidence and improved market sentiment within the financial sector. The absence of bearish effects on other industries suggests the event's influence is concentrated and sector-specific. Consequently, investors might consider overweighting Banks to capitalize on the momentum generated by Morgan Stanley's strong earnings performance, as it reflects broader financial sector strength and favorable capital flows.

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The backtest results reveal a significant negative impact on the Banks industry, with prolonged declines lasting 47 days following Morgan Stanley's earnings miss. In contrast, the Metals and Mining sector experienced a positive response over 55 days, likely driven by investor shifts toward tangible assets as a safe haven. This divergence highlights the contrasting sectoral reactions to financial earnings disappointments.

The results suggest that earnings misses in major financial institutions can weaken banking sector performance while boosting demand in resource-based industries. Investors might consider reducing exposure to Banks and increasing allocation to Metals and Mining during similar events.

This insight underscores the importance of sector rotation strategies in response to earnings surprises in the financial sector.

Backtest MS Earnings Beat Expectations

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