Correlation Between Alliancebernstein and Transamerica Intermediate
Can any of the company-specific risk be diversified away by investing in both Alliancebernstein and Transamerica Intermediate 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 Transamerica Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliancebernstein National Municipal and Transamerica Intermediate Muni, you can compare the effects of market volatilities on Alliancebernstein and Transamerica Intermediate 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 Transamerica Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Transamerica Intermediate.
Diversification Opportunities for Alliancebernstein and Transamerica Intermediate
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alliancebernstein and Transamerica is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Transamerica Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate 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 Municipal are associated (or correlated) with Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Transamerica Intermediate go up and down completely randomly.
Pair Corralation between Alliancebernstein and Transamerica Intermediate
Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to generate 2.76 times more return on investment than Transamerica Intermediate. However, Alliancebernstein is 2.76 times more volatile than Transamerica Intermediate Muni. It trades about 0.05 of its potential returns per unit of risk. Transamerica Intermediate Muni is currently generating about 0.07 per unit of risk. If you would invest 991.00 in Alliancebernstein National Municipal on August 30, 2024 and sell it today you would earn a total of 153.00 from holding Alliancebernstein National Municipal or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliancebernstein National Mun vs. Transamerica Intermediate Muni
Performance |
| Timeline |
| Alliancebernstein |
| Transamerica Intermediate |
Alliancebernstein and Transamerica Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliancebernstein and Transamerica Intermediate
The main advantage of trading using opposite Alliancebernstein and Transamerica Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliancebernstein position performs unexpectedly, Transamerica Intermediate 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 Transamerica Intermediate will offset losses from the drop in Transamerica Intermediate's long position.| Alliancebernstein vs. Gabelli Global Small | Alliancebernstein vs. MFS Investment Grade | Alliancebernstein vs. Eaton Vance National | Alliancebernstein vs. GAMCO Natural Resources |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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