Correlation Between Alliancebernstein and IShares Asia

Can any of the company-specific risk be diversified away by investing in both Alliancebernstein and IShares Asia 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 IShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alliancebernstein National Municipal and iShares Asia 50, you can compare the effects of market volatilities on Alliancebernstein and IShares Asia 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 IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and IShares Asia.

Diversification Opportunities for Alliancebernstein and IShares Asia

0.21

Correlation Coefficient

Alliancebernstein  IShares Asia

Modest diversification

The 3 months correlation between Alliancebernstein and IShares is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and iShares Asia 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia 50 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 National Municipal are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia 50 has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and IShares Asia go up and down completely randomly.

Pair Corralation between Alliancebernstein and IShares Asia

Considering the 90-day investment horizon Alliancebernstein is expected to generate 2.35 times less return on investment than IShares Asia. But when comparing it to its historical volatility, Alliancebernstein National Municipal is 2.85 times less risky than IShares Asia. It trades about 0.04 of its potential returns per unit of risk. iShares Asia 50 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,740  in iShares Asia 50 on August 30, 2024 and sell it today you would earn a total of  165.00  from holding iShares Asia 50 or generate 2.45% return on investment over 90 days.

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

Alliancebernstein National Mun  vs.  iShares Asia 50

Alliancebernstein

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alliancebernstein National Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Asia 50

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Asia 50 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, IShares Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alliancebernstein and IShares Asia

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

The idea behind Alliancebernstein National Municipal and iShares Asia 50 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.