Correlation Between Swan Defined and Alliancebernstein

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

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

Diversification Opportunities for Swan Defined and Alliancebernstein

0.64

Correlation Coefficient

Swan Defined  Alliancebernstein

Poor diversification

The 3 months correlation between Swan and Alliancebernstein is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk and Alliancebernstein Global Higho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Swan Defined 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 Swan Defined Risk 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 Swan Defined i.e., Swan Defined and Alliancebernstein go up and down completely randomly.

Pair Corralation between Swan Defined and Alliancebernstein

Assuming the 90 days horizon Swan Defined Risk is expected to under-perform the Alliancebernstein. In addition to that, Swan Defined is 23.08 times more volatile than Alliancebernstein Global Highome. It trades about -0.14 of its total potential returns per unit of risk. Alliancebernstein Global Highome is currently generating about -0.04 per unit of volatility. If you would invest  1,133  in Alliancebernstein Global Highome on December 24, 2024 and sell it today you would lose (6.00) from holding Alliancebernstein Global Highome or give up 0.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.67%
Values	Daily Returns

Swan Defined Risk  vs.  Alliancebernstein Global Higho

Swan Defined Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swan Defined Risk 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 fundamental 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.

Alliancebernstein

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliancebernstein Global Highome has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swan Defined and Alliancebernstein

The main advantage of trading using opposite Swan Defined and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Defined 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 Swan Defined Risk and Alliancebernstein Global Highome 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.