Correlation Between AllianceBernstein and Power REIT

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

Diversification Opportunities for AllianceBernstein and Power REIT

-0.23

Correlation Coefficient

AllianceBernstein  Power REIT

Very good diversification

The 3 months correlation between AllianceBernstein and Power is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT 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 Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Power REIT go up and down completely randomly.

Pair Corralation between AllianceBernstein and Power REIT

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 0.44 times more return on investment than Power REIT. However, AllianceBernstein Holding LP is 2.27 times less risky than Power REIT. It trades about 0.07 of its potential returns per unit of risk. Power REIT is currently generating about 0.0 per unit of risk. If you would invest  3,543  in AllianceBernstein Holding LP on December 30, 2024 and sell it today you would earn a total of  294.00  from holding AllianceBernstein Holding LP or generate 8.3% 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.  Power REIT

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.

Power REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Power REIT is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AllianceBernstein and Power REIT

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

The idea behind AllianceBernstein Holding LP and Power REIT 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.