Correlation Between Alliancebernstein and North Carolina

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

Diversification Opportunities for Alliancebernstein and North Carolina

0.81

Correlation Coefficient

Alliancebernstein  North Carolina

Very poor diversification

The 3 months correlation between Alliancebernstein and North is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and North Carolina Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Carolina Tax 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 North Carolina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Carolina Tax has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and North Carolina go up and down completely randomly.

Pair Corralation between Alliancebernstein and North Carolina

Assuming the 90 days horizon Alliancebernstein National Municipalome is expected to under-perform the North Carolina. In addition to that, Alliancebernstein is 10.97 times more volatile than North Carolina Tax Free. It trades about -0.26 of its total potential returns per unit of risk. North Carolina Tax Free is currently generating about -0.25 per unit of volatility. If you would invest  1,042  in North Carolina Tax Free on October 11, 2024 and sell it today you would lose (3.00) from holding North Carolina Tax Free or give up 0.29% of portfolio value over 90 days.

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

Alliancebernstein National Mun  vs.  North Carolina Tax Free

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 current stock price disturbance, may contribute to short-term losses for the investors.

North Carolina Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Carolina Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, North Carolina is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alliancebernstein and North Carolina

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

The idea behind Alliancebernstein National Municipalome and North Carolina Tax Free 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.