Correlation Between Allegheny Technologies and Morgan Stanley

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

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

Diversification Opportunities for Allegheny Technologies and Morgan Stanley

0.7

Correlation Coefficient

Allegheny Technologies  Morgan Stanley

Poor diversification

The 3 months correlation between Allegheny and Morgan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Allegheny Technologies 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 Allegheny Technologies Incorporated 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 has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Morgan Stanley go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Morgan Stanley

Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the Morgan Stanley. In addition to that, Allegheny Technologies is 6.11 times more volatile than Morgan Stanley. It trades about -0.05 of its total potential returns per unit of risk. Morgan Stanley is currently generating about 0.02 per unit of volatility. If you would invest  2,664  in Morgan Stanley on September 12, 2024 and sell it today you would earn a total of  11.00  from holding Morgan Stanley or generate 0.41% return on investment over 90 days.

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

Allegheny Technologies Incorpo  vs.  Morgan Stanley

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Morgan Stanley

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Allegheny Technologies and Morgan Stanley

The main advantage of trading using opposite Allegheny Technologies and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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 Allegheny Technologies Incorporated and Morgan Stanley 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.