Correlation Between Alliancebernstein and California Bond
Can any of the company-specific risk be diversified away by investing in both Alliancebernstein and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Alliancebernstein and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and California Bond.
Diversification Opportunities for Alliancebernstein and California Bond
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alliancebernstein and California is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and California Bond go up and down completely randomly.
Pair Corralation between Alliancebernstein and California Bond
Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to generate 2.38 times more return on investment than California Bond. However, Alliancebernstein is 2.38 times more volatile than California Bond Fund. It trades about 0.06 of its potential returns per unit of risk. California Bond Fund is currently generating about 0.06 per unit of risk. If you would invest 1,059 in Alliancebernstein National Municipal on August 27, 2024 and sell it today you would earn a total of 63.00 from holding Alliancebernstein National Municipal or generate 5.95% 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. California Bond Fund
Performance |
| Timeline |
| Alliancebernstein |
| California Bond |
Alliancebernstein and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliancebernstein and California Bond
The main advantage of trading using opposite Alliancebernstein and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliancebernstein position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Alliancebernstein vs. Eaton Vance Short | Alliancebernstein vs. Allianzgi Diversified Income | Alliancebernstein vs. Ares Dynamic Credit | Alliancebernstein vs. DWS Municipal Income |
| California Bond vs. Absolute Convertible Arbitrage | California Bond vs. Lord Abbett Vertible | California Bond vs. Putnam Convertible Incm Gwth | California Bond vs. Invesco Vertible Securities |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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