Correlation Between Alliancebernstein and Aqr Small

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

Diversification Opportunities for Alliancebernstein and Aqr Small

0.03

Correlation Coefficient

Alliancebernstein  Aqr Small

Significant diversification

The 3 months correlation between Alliancebernstein and Aqr is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap 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 Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Aqr Small go up and down completely randomly.

Pair Corralation between Alliancebernstein and Aqr Small

Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to generate 0.23 times more return on investment than Aqr Small. However, Alliancebernstein National Municipal is 4.36 times less risky than Aqr Small. It trades about -0.13 of its potential returns per unit of risk. Aqr Small Cap is currently generating about -0.26 per unit of risk. If you would invest  1,119  in Alliancebernstein National Municipal on September 22, 2024 and sell it today you would lose (22.00) from holding Alliancebernstein National Municipal or give up 1.97% of portfolio value over 90 days.

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

Alliancebernstein National Mun  vs.  Aqr Small Cap

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.

Aqr Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Alliancebernstein and Aqr Small

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

The idea behind Alliancebernstein National Municipal and Aqr Small Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.