Correlation Between Alliancebernstein and Oklahoma Municipal

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

Diversification Opportunities for Alliancebernstein and Oklahoma Municipal

0.9

Correlation Coefficient

Alliancebernstein  Oklahoma Municipal

Almost no diversification

The 3 months correlation between Alliancebernstein and Oklahoma is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma 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 National Municipal are associated (or correlated) with Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Oklahoma Municipal go up and down completely randomly.

Pair Corralation between Alliancebernstein and Oklahoma Municipal

Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to under-perform the Oklahoma Municipal. In addition to that, Alliancebernstein is 2.07 times more volatile than Oklahoma Municipal Fund. It trades about -0.02 of its total potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about -0.03 per unit of volatility. If you would invest  1,061  in Oklahoma Municipal Fund on December 1, 2024 and sell it today you would lose (5.00) from holding Oklahoma Municipal Fund or give up 0.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Alliancebernstein National Mun  vs.  Oklahoma Municipal Fund

Alliancebernstein

Risk-Adjusted Performance

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.

Oklahoma Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oklahoma Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oklahoma Municipal 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 Oklahoma Municipal

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

The idea behind Alliancebernstein National Municipal and Oklahoma Municipal Fund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.