Correlation Between MSP Recovery and Alignment Healthcare

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

By analyzing existing cross correlation between MSP Recovery and Alignment Healthcare LLC, you can compare the effects of market volatilities on MSP Recovery and Alignment Healthcare 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 MSP Recovery with a short position of Alignment Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSP Recovery and Alignment Healthcare.

Diversification Opportunities for MSP Recovery and Alignment Healthcare

-0.31

Correlation Coefficient

MSP Recovery  Alignment Healthcare

Very good diversification

The 3 months correlation between MSP and Alignment is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MSP Recovery and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC and MSP Recovery 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 MSP Recovery are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of MSP Recovery i.e., MSP Recovery and Alignment Healthcare go up and down completely randomly.

Pair Corralation between MSP Recovery and Alignment Healthcare

Assuming the 90 days horizon MSP Recovery is expected to generate 41.06 times more return on investment than Alignment Healthcare. However, MSP Recovery is 41.06 times more volatile than Alignment Healthcare LLC. It trades about 0.13 of its potential returns per unit of risk. Alignment Healthcare LLC is currently generating about 0.01 per unit of risk. If you would invest  0.24  in MSP Recovery on May 15, 2025 and sell it today you would earn a total of  6.26  from holding MSP Recovery or generate 2608.33% return on investment over 90 days.

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

MSP Recovery  vs.  Alignment Healthcare LLC

MSP Recovery

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in MSP Recovery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, MSP Recovery showed solid returns over the last few months and may actually be approaching a breakup point.

Alignment Healthcare LLC

Risk-Adjusted Performance

Weakest

Over the last 90 days Alignment Healthcare LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Alignment Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MSP Recovery and Alignment Healthcare

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

The idea behind MSP Recovery and Alignment Healthcare LLC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.