Correlation Between Morgan Stanley and AXA SA

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

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

Diversification Opportunities for Morgan Stanley and AXA SA

-0.7

Correlation Coefficient

Morgan Stanley  AXA SA

Excellent diversification

The 3 months correlation between Morgan and AXA is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 Direct are associated (or correlated) with AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and AXA SA go up and down completely randomly.

Pair Corralation between Morgan Stanley and AXA SA

Given the investment horizon of 90 days Morgan Stanley is expected to generate 2.33 times less return on investment than AXA SA. In addition to that, Morgan Stanley is 1.16 times more volatile than AXA SA. It trades about 0.06 of its total potential returns per unit of risk. AXA SA is currently generating about 0.16 per unit of volatility. If you would invest  3,406  in AXA SA on October 10, 2024 and sell it today you would earn a total of  77.00  from holding AXA SA or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Morgan Stanley Direct  vs.  AXA SA

Morgan Stanley Direct

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AXA SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and AXA SA

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

The idea behind Morgan Stanley Direct and AXA SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.