Correlation Between AllianceBernstein and ClimateRock

Can any of the company-specific risk be diversified away by investing in both AllianceBernstein and ClimateRock 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 ClimateRock 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 ClimateRock Class A, you can compare the effects of market volatilities on AllianceBernstein and ClimateRock 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 ClimateRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of AllianceBernstein and ClimateRock.

Diversification Opportunities for AllianceBernstein and ClimateRock

0.68

Correlation Coefficient

AllianceBernstein  ClimateRock

Poor diversification

The 3 months correlation between AllianceBernstein and ClimateRock is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and ClimateRock Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClimateRock Class 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 ClimateRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClimateRock Class has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and ClimateRock go up and down completely randomly.

Pair Corralation between AllianceBernstein and ClimateRock

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 20.14 times more return on investment than ClimateRock. However, AllianceBernstein is 20.14 times more volatile than ClimateRock Class A. It trades about 0.1 of its potential returns per unit of risk. ClimateRock Class A is currently generating about 0.2 per unit of risk. If you would invest  3,373  in AllianceBernstein Holding LP on August 30, 2024 and sell it today you would earn a total of  294.00  from holding AllianceBernstein Holding LP or generate 8.72% 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.  ClimateRock Class A

AllianceBernstein

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, AllianceBernstein may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ClimateRock Class

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClimateRock Class A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ClimateRock is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AllianceBernstein and ClimateRock

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

The idea behind AllianceBernstein Holding LP and ClimateRock Class A 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.