Correlation Between Morgan Stanley and Sable Offshore

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

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

Diversification Opportunities for Morgan Stanley and Sable Offshore

-0.02

Correlation Coefficient

Morgan Stanley  Sable Offshore

Good diversification

The 3 months correlation between Morgan and Sable is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp 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 Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Sable Offshore go up and down completely randomly.

Pair Corralation between Morgan Stanley and Sable Offshore

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.68 times less return on investment than Sable Offshore. But when comparing it to its historical volatility, Morgan Stanley is 2.53 times less risky than Sable Offshore. It trades about 0.13 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,083  in Sable Offshore Corp on September 4, 2024 and sell it today you would earn a total of  1,041  from holding Sable Offshore Corp or generate 96.12% 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.  Sable Offshore Corp

Morgan Stanley

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sable Offshore Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Morgan Stanley and Sable Offshore

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

The idea behind Morgan Stanley and Sable Offshore Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..