Correlation Between Alliancebernstein and M Large

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

Diversification Opportunities for Alliancebernstein and M Large

0.39

Correlation Coefficient

Alliancebernstein  M Large

Weak diversification

The 3 months correlation between Alliancebernstein and MTCGX is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global Higho and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and M Large go up and down completely randomly.

Pair Corralation between Alliancebernstein and M Large

Assuming the 90 days horizon Alliancebernstein Global Highome is expected to generate 0.11 times more return on investment than M Large. However, Alliancebernstein Global Highome is 9.12 times less risky than M Large. It trades about -0.04 of its potential returns per unit of risk. M Large Cap is currently generating about -0.12 per unit of risk. If you would invest  1,134  in Alliancebernstein Global Highome on December 25, 2024 and sell it today you would lose (7.00) from holding Alliancebernstein Global Highome or give up 0.62% of portfolio value over 90 days.

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

Alliancebernstein Global Higho  vs.  M Large Cap

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.

M Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days M Large Cap 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 technical and 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.

Pair Trading with Alliancebernstein and M Large

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

The idea behind Alliancebernstein Global Highome and M Large Cap 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.