Correlation Between AllianceBernstein and Eagle Point

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

Diversification Opportunities for AllianceBernstein and Eagle Point

0.48

Correlation Coefficient

AllianceBernstein  Eagle Point

Very weak diversification

The 3 months correlation between AllianceBernstein and Eagle is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Eagle Point Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Credit 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 Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Credit has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Eagle Point go up and down completely randomly.

Pair Corralation between AllianceBernstein and Eagle Point

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 2.43 times more return on investment than Eagle Point. However, AllianceBernstein is 2.43 times more volatile than Eagle Point Credit. It trades about 0.08 of its potential returns per unit of risk. Eagle Point Credit is currently generating about 0.18 per unit of risk. If you would invest  3,383  in AllianceBernstein Holding LP on September 13, 2024 and sell it today you would earn a total of  236.00  from holding AllianceBernstein Holding LP or generate 6.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

AllianceBernstein Holding LP  vs.  Eagle Point Credit

AllianceBernstein

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, AllianceBernstein may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eagle Point Credit

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Credit are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Eagle Point may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AllianceBernstein and Eagle Point

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

The idea behind AllianceBernstein Holding LP and Eagle Point Credit 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.