Correlation Between First Industrial and Morgan Stanley

Can any of the company-specific risk be diversified away by investing in both First Industrial 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 Industrial 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 Industrial Realty and Morgan Stanley Institutional, you can compare the effects of market volatilities on First Industrial 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 Industrial with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Morgan Stanley.

Diversification Opportunities for First Industrial and Morgan Stanley

-0.57

Correlation Coefficient

First Industrial  Morgan Stanley

Excellent diversification

The 3 months correlation between First and Morgan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Morgan Stanley Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Insti and First Industrial 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 Industrial Realty 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 Insti has no effect on the direction of First Industrial i.e., First Industrial and Morgan Stanley go up and down completely randomly.

Pair Corralation between First Industrial and Morgan Stanley

Allowing for the 90-day total investment horizon First Industrial Realty is expected to under-perform the Morgan Stanley. In addition to that, First Industrial is 1.81 times more volatile than Morgan Stanley Institutional. It trades about -0.09 of its total potential returns per unit of risk. Morgan Stanley Institutional is currently generating about -0.01 per unit of volatility. If you would invest  1,013  in Morgan Stanley Institutional on September 16, 2024 and sell it today you would lose (4.00) from holding Morgan Stanley Institutional or give up 0.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.46%
Values	Daily Returns

First Industrial Realty  vs.  Morgan Stanley Institutional

First Industrial Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First Industrial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Morgan Stanley Insti

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Industrial and Morgan Stanley

The main advantage of trading using opposite First Industrial and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial 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 First Industrial Realty and Morgan Stanley Institutional 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.