Correlation Between Alliancebernstein and American Beacon

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

Diversification Opportunities for Alliancebernstein and American Beacon

0.48

Correlation Coefficient

Alliancebernstein  American Beacon

Very weak diversification

The 3 months correlation between Alliancebernstein and American is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and American Beacon Sim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Sim 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Sim has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and American Beacon go up and down completely randomly.

Pair Corralation between Alliancebernstein and American Beacon

Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to under-perform the American Beacon. In addition to that, Alliancebernstein is 3.06 times more volatile than American Beacon Sim. It trades about -0.02 of its total potential returns per unit of risk. American Beacon Sim is currently generating about 0.1 per unit of volatility. If you would invest  922.00  in American Beacon Sim on December 4, 2024 and sell it today you would earn a total of  10.00  from holding American Beacon Sim or generate 1.08% return on investment over 90 days.

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

Alliancebernstein National Mun  vs.  American Beacon Sim

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.

American Beacon Sim

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Sim are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Beacon 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 American Beacon

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

The idea behind Alliancebernstein National Municipal and American Beacon Sim 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.