Correlation Between Morgan Stanley and Satrix Indi

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Satrix Indi 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 Satrix Indi 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 Satrix Indi ETF, you can compare the effects of market volatilities on Morgan Stanley and Satrix Indi 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 Satrix Indi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Satrix Indi.

Diversification Opportunities for Morgan Stanley and Satrix Indi

0.44

Correlation Coefficient

Morgan Stanley  Satrix Indi

Very weak diversification

The 3 months correlation between Morgan and Satrix is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Satrix Indi ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satrix Indi ETF 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 Satrix Indi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satrix Indi ETF has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Satrix Indi go up and down completely randomly.

Pair Corralation between Morgan Stanley and Satrix Indi

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.13 times less return on investment than Satrix Indi. In addition to that, Morgan Stanley is 1.53 times more volatile than Satrix Indi ETF. It trades about 0.23 of its total potential returns per unit of risk. Satrix Indi ETF is currently generating about 0.39 per unit of volatility. If you would invest  1,139,800  in Satrix Indi ETF on September 15, 2024 and sell it today you would earn a total of  68,800  from holding Satrix Indi ETF or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.3%
Values	Daily Returns

Morgan Stanley Direct  vs.  Satrix Indi ETF

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Satrix Indi ETF

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Satrix Indi ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Satrix Indi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Morgan Stanley and Satrix Indi

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

The idea behind Morgan Stanley Direct and Satrix Indi 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.