Correlation Between AllianceBernstein and Morgan Stanley

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

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

Diversification Opportunities for AllianceBernstein and Morgan Stanley

0.64

Correlation Coefficient

AllianceBernstein  Morgan Stanley

Poor diversification

The 3 months correlation between AllianceBernstein and Morgan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and AllianceBernstein 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 AllianceBernstein Holding LP 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 AllianceBernstein i.e., AllianceBernstein and Morgan Stanley go up and down completely randomly.

Pair Corralation between AllianceBernstein and Morgan Stanley

Allowing for the 90-day total investment horizon AllianceBernstein is expected to generate 11.19 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, AllianceBernstein Holding LP is 1.03 times less risky than Morgan Stanley. It trades about 0.02 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  11,751  in Morgan Stanley on May 6, 2025 and sell it today you would earn a total of  2,158  from holding Morgan Stanley or generate 18.36% return on investment over 90 days.

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

AllianceBernstein Holding LP  vs.  Morgan Stanley

AllianceBernstein

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, AllianceBernstein is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Morgan Stanley

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Morgan Stanley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AllianceBernstein and Morgan Stanley

The main advantage of trading using opposite AllianceBernstein and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AllianceBernstein 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 AllianceBernstein Holding LP 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.