Correlation Between AllianceBernstein and Nuveen Dynamic

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

Diversification Opportunities for AllianceBernstein and Nuveen Dynamic

-0.31

Correlation Coefficient

AllianceBernstein  Nuveen Dynamic

Very good diversification

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

Pair Corralation between AllianceBernstein and Nuveen Dynamic

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 2.17 times more return on investment than Nuveen Dynamic. However, AllianceBernstein is 2.17 times more volatile than Nuveen Dynamic Municipal. It trades about 0.12 of its potential returns per unit of risk. Nuveen Dynamic Municipal is currently generating about 0.03 per unit of risk. If you would invest  3,297  in AllianceBernstein Holding LP on September 3, 2024 and sell it today you would earn a total of  330.00  from holding AllianceBernstein Holding LP or generate 10.01% return on investment over 90 days.

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

AllianceBernstein Holding LP  vs.  Nuveen Dynamic Municipal

AllianceBernstein

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 9 (%) 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.

Nuveen Dynamic Municipal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dynamic Municipal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Nuveen Dynamic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AllianceBernstein and Nuveen Dynamic

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

The idea behind AllianceBernstein Holding LP and Nuveen Dynamic Municipal 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.