Correlation Between Morgan Stanley and First Trust
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley ETF and First Trust Small, you can compare the effects of market volatilities on Morgan Stanley and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and First Trust.
Diversification Opportunities for Morgan Stanley and First Trust
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and First is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley ETF and First Trust Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Small 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 ETF are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Small has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and First Trust go up and down completely randomly.
Pair Corralation between Morgan Stanley and First Trust
Given the investment horizon of 90 days Morgan Stanley ETF is expected to generate 0.61 times more return on investment than First Trust. However, Morgan Stanley ETF is 1.63 times less risky than First Trust. It trades about 0.05 of its potential returns per unit of risk. First Trust Small is currently generating about 0.02 per unit of risk. If you would invest 2,230 in Morgan Stanley ETF on October 24, 2025 and sell it today you would earn a total of 485.00 from holding Morgan Stanley ETF or generate 21.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley ETF vs. First Trust Small
Performance |
| Timeline |
| Morgan Stanley ETF |
| First Trust Small |
Morgan Stanley and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and First Trust
The main advantage of trading using opposite Morgan Stanley and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Morgan Stanley vs. 2023 EFT Series | Morgan Stanley vs. Russell Equity Income | Morgan Stanley vs. OneAscent International Equity | Morgan Stanley vs. JP Morgan Exchange Traded |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Bloomberg | First Trust vs. First Trust Mid | First Trust vs. Xtrackers MSCI Emerging |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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