Correlation Between Alibaba Group and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Morgan Stanley, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Morgan Stanley.
Diversification Opportunities for Alibaba Group and Morgan Stanley
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alibaba and Morgan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and Morgan Stanley go up and down completely randomly.
Pair Corralation between Alibaba Group and Morgan Stanley
Assuming the 90 days trading horizon Alibaba Group is expected to generate 1.3 times less return on investment than Morgan Stanley. In addition to that, Alibaba Group is 1.18 times more volatile than Morgan Stanley. It trades about 0.11 of its total potential returns per unit of risk. Morgan Stanley is currently generating about 0.16 per unit of volatility. If you would invest 202,152 in Morgan Stanley on November 2, 2024 and sell it today you would earn a total of 82,848 from holding Morgan Stanley or generate 40.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.03% |
| Values | Daily Returns |
Alibaba Group Holding vs. Morgan Stanley
Performance |
| Timeline |
| Alibaba Group Holding |
| Morgan Stanley |
Alibaba Group and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Morgan Stanley
The main advantage of trading using opposite Alibaba Group and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.| Alibaba Group vs. Ameriprise Financial | Alibaba Group vs. Capital One Financial | Alibaba Group vs. The Bank of | Alibaba Group vs. Southwest Airlines |
| Morgan Stanley vs. The Charles Schwab | Morgan Stanley vs. The Goldman Sachs | Morgan Stanley vs. Value Grupo Financiero | Morgan Stanley vs. Corporativo GBM SAB |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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