Correlation Between Alliancebernstein and Aqr Small

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

Diversification Opportunities for Alliancebernstein and Aqr Small

-0.19

Correlation Coefficient

Alliancebernstein  Aqr Small

Good diversification

The 3 months correlation between Alliancebernstein and Aqr is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small 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 Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Aqr Small go up and down completely randomly.

Pair Corralation between Alliancebernstein and Aqr Small

Considering the 90-day investment horizon Alliancebernstein is expected to generate 40.14 times less return on investment than Aqr Small. But when comparing it to its historical volatility, Alliancebernstein Global High is 3.3 times less risky than Aqr Small. It trades about 0.01 of its potential returns per unit of risk. Aqr Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,848  in Aqr Small Cap on September 2, 2024 and sell it today you would earn a total of  246.00  from holding Aqr Small Cap or generate 13.31% 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.  Aqr Small 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.

Aqr Small Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliancebernstein and Aqr Small

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

The idea behind Alliancebernstein Global High and Aqr Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.