Correlation Between Power REIT and AllianceBernstein

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

By analyzing existing cross correlation between Power REIT and AllianceBernstein Holding LP, you can compare the effects of market volatilities on Power REIT 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 Power REIT with a short position of AllianceBernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and AllianceBernstein.

Diversification Opportunities for Power REIT and AllianceBernstein

-0.23

Correlation Coefficient

Power REIT  AllianceBernstein

Very good diversification

The 3 months correlation between Power and AllianceBernstein is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and AllianceBernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBernstein and Power REIT 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 Power REIT 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 Power REIT i.e., Power REIT and AllianceBernstein go up and down completely randomly.

Pair Corralation between Power REIT and AllianceBernstein

Allowing for the 90-day total investment horizon Power REIT is expected to under-perform the AllianceBernstein. In addition to that, Power REIT is 2.27 times more volatile than AllianceBernstein Holding LP. It trades about 0.0 of its total potential returns per unit of risk. AllianceBernstein Holding LP is currently generating about 0.07 per unit of volatility. If you would invest  3,543  in AllianceBernstein Holding LP on December 30, 2024 and sell it today you would earn a total of  294.00  from holding AllianceBernstein Holding LP or generate 8.3% return on investment over 90 days.

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

Power REIT  vs.  AllianceBernstein Holding LP

Power REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Power REIT is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AllianceBernstein

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, AllianceBernstein may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Power REIT and AllianceBernstein

The main advantage of trading using opposite Power REIT and AllianceBernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT 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 Power REIT and AllianceBernstein Holding LP 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.