Correlation Between AllianceBernstein and Strats SM

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

Diversification Opportunities for AllianceBernstein and Strats SM

0.5

Correlation Coefficient

AllianceBernstein  Strats SM

Very weak diversification

The 3 months correlation between AllianceBernstein and Strats is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Strats SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats SM Trust 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 Strats SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats SM Trust has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Strats SM go up and down completely randomly.

Pair Corralation between AllianceBernstein and Strats SM

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 3.46 times more return on investment than Strats SM. However, AllianceBernstein is 3.46 times more volatile than Strats SM Trust. It trades about 0.06 of its potential returns per unit of risk. Strats SM Trust is currently generating about 0.01 per unit of risk. If you would invest  3,546  in AllianceBernstein Holding LP on December 23, 2024 and sell it today you would earn a total of  257.00  from holding AllianceBernstein Holding LP or generate 7.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.16%
Values	Daily Returns

AllianceBernstein Holding LP  vs.  Strats SM Trust

AllianceBernstein

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 5 (%) 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 April 2025.

Strats SM Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strats SM Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, Strats SM is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AllianceBernstein and Strats SM

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

The idea behind AllianceBernstein Holding LP and Strats SM Trust 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.