Correlation Between Alliancebernstein and Transamerica Small/mid

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

Diversification Opportunities for Alliancebernstein and Transamerica Small/mid

-0.1

Correlation Coefficient

Alliancebernstein  Transamerica Small/mid

Good diversification

The 3 months correlation between Alliancebernstein and Transamerica is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and Transamerica Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Smallmid 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 Global High are associated (or correlated) with Transamerica Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Smallmid Cap has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Transamerica Small/mid go up and down completely randomly.

Pair Corralation between Alliancebernstein and Transamerica Small/mid

Considering the 90-day investment horizon Alliancebernstein Global High is expected to generate 0.67 times more return on investment than Transamerica Small/mid. However, Alliancebernstein Global High is 1.49 times less risky than Transamerica Small/mid. It trades about 0.2 of its potential returns per unit of risk. Transamerica Smallmid Cap is currently generating about -0.21 per unit of risk. If you would invest  1,090  in Alliancebernstein Global High on December 4, 2024 and sell it today you would earn a total of  17.00  from holding Alliancebernstein Global High or generate 1.56% 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.  Transamerica Smallmid Cap

Alliancebernstein

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alliancebernstein Global High are ranked lower than 6 (%) 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.

Transamerica Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Smallmid Cap 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 basic 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 Transamerica Small/mid

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

The idea behind Alliancebernstein Global High and Transamerica Smallmid 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.