Correlation Between Morgan Stanley and Fidelity Advisorâ®

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

By analyzing existing cross correlation between Morgan Stanley Direct and Fidelity Advisor Sustainable, you can compare the effects of market volatilities on Morgan Stanley and Fidelity Advisorâ® 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 Fidelity Advisorâ®. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Fidelity Advisorâ®.

Diversification Opportunities for Morgan Stanley and Fidelity Advisorâ®

0.05

Correlation Coefficient

Morgan Stanley  Fidelity Advisorâ®

Significant diversification

The 3 months correlation between Morgan and Fidelity is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Fidelity Advisor Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sus 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 Direct are associated (or correlated) with Fidelity Advisorâ®. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Sus has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Fidelity Advisorâ® go up and down completely randomly.

Pair Corralation between Morgan Stanley and Fidelity Advisorâ®

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Fidelity Advisorâ®. In addition to that, Morgan Stanley is 1.5 times more volatile than Fidelity Advisor Sustainable. It trades about -0.15 of its total potential returns per unit of risk. Fidelity Advisor Sustainable is currently generating about 0.04 per unit of volatility. If you would invest  1,043  in Fidelity Advisor Sustainable on December 3, 2024 and sell it today you would earn a total of  4.00  from holding Fidelity Advisor Sustainable or generate 0.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Morgan Stanley Direct  vs.  Fidelity Advisor Sustainable

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Fidelity Advisor Sus

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Morgan Stanley and Fidelity Advisorâ®

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

The idea behind Morgan Stanley Direct and Fidelity Advisor Sustainable 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.