Correlation Between Astar and Morgan Stanley

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

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

Diversification Opportunities for Astar and Morgan Stanley

0.63

Correlation Coefficient

Astar  Morgan Stanley

Poor diversification

The 3 months correlation between Astar and Morgan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Morgan Stanley ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley ETF and Astar 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 Astar 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 ETF has no effect on the direction of Astar i.e., Astar and Morgan Stanley go up and down completely randomly.

Pair Corralation between Astar and Morgan Stanley

Assuming the 90 days trading horizon Astar is expected to generate 8.31 times more return on investment than Morgan Stanley. However, Astar is 8.31 times more volatile than Morgan Stanley ETF. It trades about 0.04 of its potential returns per unit of risk. Morgan Stanley ETF is currently generating about -0.05 per unit of risk. If you would invest  5.91  in Astar on October 10, 2024 and sell it today you would earn a total of  0.23  from holding Astar or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Astar  vs.  Morgan Stanley ETF

Astar

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Astar and Morgan Stanley

The main advantage of trading using opposite Astar and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.

The idea behind Astar and Morgan Stanley ETF 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.