Correlation Between Alliancebernstein and Northern Global

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

Diversification Opportunities for Alliancebernstein and Northern Global

0.32

Correlation Coefficient

Alliancebernstein  Northern Global

Weak diversification

The 3 months correlation between Alliancebernstein and Northern is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Northern Global Sustainability in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Global Sust 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 Northern Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Global Sust has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Northern Global go up and down completely randomly.

Pair Corralation between Alliancebernstein and Northern Global

Considering the 90-day investment horizon Alliancebernstein is expected to generate 3.41 times less return on investment than Northern Global. But when comparing it to its historical volatility, Alliancebernstein National Municipal is 1.26 times less risky than Northern Global. It trades about 0.03 of its potential returns per unit of risk. Northern Global Sustainability is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,660  in Northern Global Sustainability on September 27, 2024 and sell it today you would earn a total of  662.00  from holding Northern Global Sustainability or generate 39.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Alliancebernstein National Mun  vs.  Northern Global Sustainability

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein National Municipal has generated negative risk-adjusted returns adding no value to fund investors. 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.

Northern Global Sust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Global Sustainability has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Northern Global 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 Northern Global

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

The idea behind Alliancebernstein National Municipal and Northern Global Sustainability 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 Global Correlations module to find global opportunities by holding instruments from different markets.