Correlation Between Alight and Manhattan Associates

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

By analyzing existing cross correlation between Alight Inc and Manhattan Associates, you can compare the effects of market volatilities on Alight and Manhattan Associates 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 Alight with a short position of Manhattan Associates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alight and Manhattan Associates.

Diversification Opportunities for Alight and Manhattan Associates

0.19

Correlation Coefficient

Alight  Manhattan Associates

Average diversification

The 3 months correlation between Alight and Manhattan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alight Inc and Manhattan Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Associates and Alight 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 Alight Inc are associated (or correlated) with Manhattan Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Associates has no effect on the direction of Alight i.e., Alight and Manhattan Associates go up and down completely randomly.

Pair Corralation between Alight and Manhattan Associates

Given the investment horizon of 90 days Alight Inc is expected to under-perform the Manhattan Associates. In addition to that, Alight is 1.32 times more volatile than Manhattan Associates. It trades about -0.02 of its total potential returns per unit of risk. Manhattan Associates is currently generating about 0.07 per unit of volatility. If you would invest  27,517  in Manhattan Associates on September 19, 2024 and sell it today you would earn a total of  1,989  from holding Manhattan Associates or generate 7.23% return on investment over 90 days.

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

Alight Inc  vs.  Manhattan Associates

Alight Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alight Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Alight is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Manhattan Associates

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manhattan Associates are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Manhattan Associates may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alight and Manhattan Associates

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

The idea behind Alight Inc and Manhattan Associates 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.