Correlation Between AllianceBernstein and RF Acquisition

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

Diversification Opportunities for AllianceBernstein and RF Acquisition

0.51

Correlation Coefficient

AllianceBernstein  RF Acquisition

Very weak diversification

The 3 months correlation between AllianceBernstein and RFACR is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and RF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Acquisition Corp 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 RF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Acquisition Corp has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and RF Acquisition go up and down completely randomly.

Pair Corralation between AllianceBernstein and RF Acquisition

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to under-perform the RF Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, AllianceBernstein Holding LP is 4.93 times less risky than RF Acquisition. The stock trades about -0.03 of its potential returns per unit of risk. The RF Acquisition Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  23.00  in RF Acquisition Corp on December 1, 2024 and sell it today you would earn a total of  2.00  from holding RF Acquisition Corp or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	57.14%
Values	Daily Returns

AllianceBernstein Holding LP  vs.  RF Acquisition Corp

AllianceBernstein

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 4 (%) 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.

RF Acquisition Corp

Risk-Adjusted Performance

Good

Over the last 90 days RF Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, RF Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AllianceBernstein and RF Acquisition

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

The idea behind AllianceBernstein Holding LP and RF Acquisition Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.