Correlation Between Alger Mid and Morgan Stanley

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

By analyzing existing cross correlation between Alger Mid Cap and Morgan Stanley Institutional, you can compare the effects of market volatilities on Alger Mid 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 Alger Mid with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Mid and Morgan Stanley.

Diversification Opportunities for Alger Mid and Morgan Stanley

0.8

Correlation Coefficient

Alger Mid  Morgan Stanley

Very poor diversification

The 3 months correlation between Alger and Morgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap 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 Alger Mid 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 Alger Mid Cap 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 Alger Mid i.e., Alger Mid and Morgan Stanley go up and down completely randomly.

Pair Corralation between Alger Mid and Morgan Stanley

If you would invest  100.00  in Morgan Stanley Institutional on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Morgan Stanley Institutional or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Alger Mid Cap  vs.  Morgan Stanley Institutional

Alger Mid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Alger Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley Insti

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Institutional are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Alger Mid and Morgan Stanley

The main advantage of trading using opposite Alger Mid and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Mid 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 Alger Mid Cap 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.