Correlation Between Alliancebernstein and M Large

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

Diversification Opportunities for Alliancebernstein and M Large

0.16

Correlation Coefficient

Alliancebernstein  M Large

Average diversification

The 3 months correlation between Alliancebernstein and MTCGX is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and M Large go up and down completely randomly.

Pair Corralation between Alliancebernstein and M Large

Considering the 90-day investment horizon Alliancebernstein Global High is expected to generate 0.26 times more return on investment than M Large. However, Alliancebernstein Global High is 3.78 times less risky than M Large. It trades about -0.07 of its potential returns per unit of risk. M Large Cap is currently generating about -0.09 per unit of risk. If you would invest  1,085  in Alliancebernstein Global High on October 13, 2024 and sell it today you would lose (21.00) from holding Alliancebernstein Global High or give up 1.94% of portfolio value over 90 days.

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

Alliancebernstein Global High  vs.  M Large Cap

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.

M Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Alliancebernstein and M Large

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

The idea behind Alliancebernstein Global High and M Large 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.