Correlation Between First Trust and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Managed and Morgan Stanley ETF, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Morgan Stanley.
Diversification Opportunities for First Trust and Morgan Stanley
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Morgan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed 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 First Trust 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 First Trust Managed 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 First Trust i.e., First Trust and Morgan Stanley go up and down completely randomly.
Pair Corralation between First Trust and Morgan Stanley
Considering the 90-day investment horizon First Trust Managed is expected to under-perform the Morgan Stanley. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Managed is 1.04 times less risky than Morgan Stanley. The etf trades about -0.02 of its potential returns per unit of risk. The Morgan Stanley ETF is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,249 in Morgan Stanley ETF on November 27, 2024 and sell it today you would earn a total of 5.00 from holding Morgan Stanley ETF or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Managed vs. Morgan Stanley ETF
Performance |
| Timeline |
| First Trust Managed |
| Morgan Stanley ETF |
First Trust and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Morgan Stanley
The main advantage of trading using opposite First Trust and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW |
| Morgan Stanley vs. iShares National Muni | Morgan Stanley vs. Vanguard Tax Exempt Bond | Morgan Stanley vs. First Trust Managed | Morgan Stanley vs. VanEck Intermediate Muni |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| CEOs Directory Screen CEOs from public companies around the world |