Correlation Between Alliancebernstein and Amer Beacon

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

By analyzing existing cross correlation between Alliancebernstein National Municipalome and Amer Beacon Ark, you can compare the effects of market volatilities on Alliancebernstein and Amer Beacon 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 Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Amer Beacon.

Diversification Opportunities for Alliancebernstein and Amer Beacon

-0.05

Correlation Coefficient

Alliancebernstein  Amer Beacon

Good diversification

The 3 months correlation between Alliancebernstein and Amer is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark 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 National Municipalome are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Amer Beacon go up and down completely randomly.

Pair Corralation between Alliancebernstein and Amer Beacon

Assuming the 90 days horizon Alliancebernstein National Municipalome is expected to under-perform the Amer Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alliancebernstein National Municipalome is 4.84 times less risky than Amer Beacon. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Amer Beacon Ark is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,324  in Amer Beacon Ark on October 26, 2024 and sell it today you would earn a total of  387.00  from holding Amer Beacon Ark or generate 29.23% return on investment over 90 days.

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

Alliancebernstein National Mun  vs.  Amer Beacon Ark

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amer Beacon Ark

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Ark are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amer Beacon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliancebernstein and Amer Beacon

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

The idea behind Alliancebernstein National Municipalome and Amer Beacon Ark 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.