Correlation Between AdvisorShares STAR and Morgan Stanley

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

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

Diversification Opportunities for AdvisorShares STAR and Morgan Stanley

0.79

Correlation Coefficient

AdvisorShares STAR  Morgan Stanley

Poor diversification

The 3 months correlation between AdvisorShares and Morgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares STAR Global 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 AdvisorShares STAR 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 AdvisorShares STAR Global 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 AdvisorShares STAR i.e., AdvisorShares STAR and Morgan Stanley go up and down completely randomly.

Pair Corralation between AdvisorShares STAR and Morgan Stanley

Given the investment horizon of 90 days AdvisorShares STAR Global is expected to generate 0.66 times more return on investment than Morgan Stanley. However, AdvisorShares STAR Global is 1.52 times less risky than Morgan Stanley. It trades about 0.23 of its potential returns per unit of risk. Morgan Stanley ETF is currently generating about 0.02 per unit of risk. If you would invest  4,335  in AdvisorShares STAR Global on May 8, 2025 and sell it today you would earn a total of  320.00  from holding AdvisorShares STAR Global or generate 7.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AdvisorShares STAR Global  vs.  Morgan Stanley ETF

AdvisorShares STAR Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares STAR Global are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, AdvisorShares STAR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Morgan Stanley ETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 AdvisorShares STAR and Morgan Stanley

The main advantage of trading using opposite AdvisorShares STAR and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares STAR 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 AdvisorShares STAR Global 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.