Correlation Between Morgan Stanley and MFS Intermediate

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

By analyzing existing cross correlation between Morgan Stanley and MFS Intermediate Income, you can compare the effects of market volatilities on Morgan Stanley and MFS Intermediate 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 MFS Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and MFS Intermediate.

Diversification Opportunities for Morgan Stanley and MFS Intermediate

-0.6

Correlation Coefficient

Morgan Stanley  MFS Intermediate

Excellent diversification

The 3 months correlation between Morgan and MFS is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and MFS Intermediate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Intermediate Income 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 MFS Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Intermediate Income has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and MFS Intermediate go up and down completely randomly.

Pair Corralation between Morgan Stanley and MFS Intermediate

Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 3.19 times more return on investment than MFS Intermediate. However, Morgan Stanley is 3.19 times more volatile than MFS Intermediate Income. It trades about 0.23 of its potential returns per unit of risk. MFS Intermediate Income is currently generating about 0.0 per unit of risk. If you would invest  9,849  in Morgan Stanley on September 3, 2024 and sell it today you would earn a total of  3,312  from holding Morgan Stanley or generate 33.63% return on investment over 90 days.

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

Morgan Stanley  vs.  MFS Intermediate Income

Morgan Stanley

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

MFS Intermediate Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Intermediate Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, MFS Intermediate is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and MFS Intermediate

The main advantage of trading using opposite Morgan Stanley and MFS Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, MFS Intermediate 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 MFS Intermediate will offset losses from the drop in MFS Intermediate's long position.

The idea behind Morgan Stanley and MFS Intermediate Income 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.