Correlation Between Alliancebernstein and Litman Gregory

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

By analyzing existing cross correlation between Alliancebernstein Global Highome and Litman Gregory Masters, you can compare the effects of market volatilities on Alliancebernstein and Litman Gregory 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 Litman Gregory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Litman Gregory.

Diversification Opportunities for Alliancebernstein and Litman Gregory

0.64

Correlation Coefficient

Alliancebernstein  Litman Gregory

Poor diversification

The 3 months correlation between Alliancebernstein and Litman is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global Higho and Litman Gregory Masters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litman Gregory Masters 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 Global Highome are associated (or correlated) with Litman Gregory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litman Gregory Masters has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Litman Gregory go up and down completely randomly.

Pair Corralation between Alliancebernstein and Litman Gregory

Assuming the 90 days horizon Alliancebernstein Global Highome is expected to under-perform the Litman Gregory. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alliancebernstein Global Highome is 1.06 times less risky than Litman Gregory. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Litman Gregory Masters is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Litman Gregory Masters on October 8, 2024 and sell it today you would lose (7.00) from holding Litman Gregory Masters or give up 0.7% of portfolio value over 90 days.

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

Alliancebernstein Global Higho  vs.  Litman Gregory Masters

Alliancebernstein

Risk-Adjusted Performance

0 of 100

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.

Litman Gregory Masters

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Litman Gregory Masters are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Litman Gregory 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 Litman Gregory

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

The idea behind Alliancebernstein Global Highome and Litman Gregory Masters 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 Stocks Directory module to find actively traded stocks across global markets.