Correlation Between Alliancebernstein and Hennessy Cornerstone

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

Diversification Opportunities for Alliancebernstein and Hennessy Cornerstone

-0.12

Correlation Coefficient

Alliancebernstein  Hennessy Cornerstone

Good diversification

The 3 months correlation between Alliancebernstein and Hennessy is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid 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 Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Mid has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Hennessy Cornerstone go up and down completely randomly.

Pair Corralation between Alliancebernstein and Hennessy Cornerstone

Considering the 90-day investment horizon Alliancebernstein Global High is expected to generate 0.39 times more return on investment than Hennessy Cornerstone. However, Alliancebernstein Global High is 2.59 times less risky than Hennessy Cornerstone. It trades about 0.07 of its potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about -0.24 per unit of risk. If you would invest  1,083  in Alliancebernstein Global High on December 5, 2024 and sell it today you would earn a total of  19.00  from holding Alliancebernstein Global High or generate 1.75% return on investment over 90 days.

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

Alliancebernstein Global High  vs.  Hennessy Nerstone Mid

Alliancebernstein

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alliancebernstein Global High are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Hennessy Nerstone Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hennessy Nerstone Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Alliancebernstein and Hennessy Cornerstone

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

The idea behind Alliancebernstein Global High and Hennessy Nerstone Mid 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.