Correlation Between Kensington Dynamic and Alliancebernstein

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

By analyzing existing cross correlation between Kensington Dynamic Growth and Alliancebernstein Global High, you can compare the effects of market volatilities on Kensington Dynamic and Alliancebernstein 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 Kensington Dynamic with a short position of Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Dynamic and Alliancebernstein.

Diversification Opportunities for Kensington Dynamic and Alliancebernstein

-0.39

Correlation Coefficient

Kensington Dynamic  Alliancebernstein

Very good diversification

The 3 months correlation between Kensington and Alliancebernstein is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Dynamic Growth and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Kensington Dynamic 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 Kensington Dynamic Growth are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Kensington Dynamic i.e., Kensington Dynamic and Alliancebernstein go up and down completely randomly.

Pair Corralation between Kensington Dynamic and Alliancebernstein

Assuming the 90 days horizon Kensington Dynamic Growth is expected to generate 2.47 times more return on investment than Alliancebernstein. However, Kensington Dynamic is 2.47 times more volatile than Alliancebernstein Global High. It trades about 0.01 of its potential returns per unit of risk. Alliancebernstein Global High is currently generating about -0.1 per unit of risk. If you would invest  1,085  in Kensington Dynamic Growth on October 5, 2024 and sell it today you would earn a total of  6.00  from holding Kensington Dynamic Growth or generate 0.55% return on investment over 90 days.

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

Kensington Dynamic Growth  vs.  Alliancebernstein Global High

Kensington Dynamic Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kensington Dynamic Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Kensington Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Kensington Dynamic and Alliancebernstein

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

The idea behind Kensington Dynamic Growth and Alliancebernstein Global High 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.