Correlation Between Alliancebernstein and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Alliancebernstein and Franklin Federal 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 Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliancebernstein Global High and Franklin Federal Tax Free, you can compare the effects of market volatilities on Alliancebernstein and Franklin Federal 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 Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Franklin Federal.
Diversification Opportunities for Alliancebernstein and Franklin Federal
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliancebernstein and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal 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 Global High are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Franklin Federal go up and down completely randomly.
Pair Corralation between Alliancebernstein and Franklin Federal
Considering the 90-day investment horizon Alliancebernstein Global High is expected to generate 1.43 times more return on investment than Franklin Federal. However, Alliancebernstein is 1.43 times more volatile than Franklin Federal Tax Free. It trades about 0.18 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.21 per unit of risk. If you would invest 1,077 in Alliancebernstein Global High on August 31, 2024 and sell it today you would earn a total of 20.00 from holding Alliancebernstein Global High or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliancebernstein Global High vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Alliancebernstein |
| Franklin Federal Tax |
Alliancebernstein and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliancebernstein and Franklin Federal
The main advantage of trading using opposite Alliancebernstein and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliancebernstein position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Alliancebernstein vs. MFS Investment Grade | Alliancebernstein vs. Eaton Vance Municipal | Alliancebernstein vs. DTF Tax Free | Alliancebernstein vs. HUMANA INC |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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