Correlation Between Morgan Stanley and Saratoga Investment
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Saratoga Investment 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 Saratoga Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Saratoga Investment Corp, you can compare the effects of market volatilities on Morgan Stanley and Saratoga Investment 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 Saratoga Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Saratoga Investment.
Diversification Opportunities for Morgan Stanley and Saratoga Investment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Morgan and Saratoga is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Saratoga Investment go up and down completely randomly.
Pair Corralation between Morgan Stanley and Saratoga Investment
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 2.61 times more return on investment than Saratoga Investment. However, Morgan Stanley is 2.61 times more volatile than Saratoga Investment Corp. It trades about 0.21 of its potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.39 per unit of risk. If you would invest 11,614 in Morgan Stanley on September 4, 2024 and sell it today you would earn a total of 1,430 from holding Morgan Stanley or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Saratoga Investment Corp
Performance |
| Timeline |
| Morgan Stanley |
| Saratoga Investment Corp |
Morgan Stanley and Saratoga Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Saratoga Investment
The main advantage of trading using opposite Morgan Stanley and Saratoga Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Saratoga Investment 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 Saratoga Investment will offset losses from the drop in Saratoga Investment's long position.| Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Applied Blockchain | Morgan Stanley vs. Hut 8 Corp | Morgan Stanley vs. Bitfarms |
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Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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