Correlation Between Alliancebernstein and Dreyfus Select

Can any of the company-specific risk be diversified away by investing in both Alliancebernstein and Dreyfus Select 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 Dreyfus Select into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alliancebernstein Global High and Dreyfus Select Managers, you can compare the effects of market volatilities on Alliancebernstein and Dreyfus Select 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 Dreyfus Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Dreyfus Select.

Diversification Opportunities for Alliancebernstein and Dreyfus Select

-0.27

Correlation Coefficient

Alliancebernstein  Dreyfus Select

Very good diversification

The 3 months correlation between Alliancebernstein and Dreyfus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and Dreyfus Select Managers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Select Managers 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 Global High are associated (or correlated) with Dreyfus Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Select Managers has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Dreyfus Select go up and down completely randomly.

Pair Corralation between Alliancebernstein and Dreyfus Select

Considering the 90-day investment horizon Alliancebernstein is expected to generate 6.69 times less return on investment than Dreyfus Select. But when comparing it to its historical volatility, Alliancebernstein Global High is 1.21 times less risky than Dreyfus Select. It trades about 0.07 of its potential returns per unit of risk. Dreyfus Select Managers is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  2,044  in Dreyfus Select Managers on September 30, 2024 and sell it today you would earn a total of  111.00  from holding Dreyfus Select Managers or generate 5.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	19.05%
Values	Daily Returns

Alliancebernstein Global High  vs.  Dreyfus Select Managers

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein Global High has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dreyfus Select Managers

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Alliancebernstein Global High and Dreyfus Select Managers 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.