Correlation Between Alliancebernstein and Westwood Quality

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

Diversification Opportunities for Alliancebernstein and Westwood Quality

-0.26

Correlation Coefficient

Alliancebernstein  Westwood Quality

Very good diversification

The 3 months correlation between Alliancebernstein and Westwood is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Westwood Quality Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Quality Value 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 Westwood Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Quality Value has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Westwood Quality go up and down completely randomly.

Pair Corralation between Alliancebernstein and Westwood Quality

Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to under-perform the Westwood Quality. But the fund apears to be less risky and, when comparing its historical volatility, Alliancebernstein National Municipal is 1.11 times less risky than Westwood Quality. The fund trades about -0.06 of its potential returns per unit of risk. The Westwood Quality Value is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,438  in Westwood Quality Value on September 4, 2024 and sell it today you would earn a total of  61.00  from holding Westwood Quality Value or generate 4.24% return on investment over 90 days.

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

Alliancebernstein National Mun  vs.  Westwood Quality Value

Alliancebernstein

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alliancebernstein National Municipal are ranked lower than 3 (%) 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.

Westwood Quality Value

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Quality Value are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Westwood Quality 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 Westwood Quality

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

The idea behind Alliancebernstein National Municipal and Westwood Quality Value 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.