Correlation Between Health Care and Alliancebernstein
Can any of the company-specific risk be diversified away by investing in both Health Care and Alliancebernstein 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 Health Care and Alliancebernstein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Fund and Alliancebernstein Global Highome, you can compare the effects of market volatilities on Health Care and Alliancebernstein 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 Health Care with a short position of Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Alliancebernstein.
Diversification Opportunities for Health Care and Alliancebernstein
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Health and Alliancebernstein is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Alliancebernstein Global Higho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Health Care 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 Health Care Fund are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Health Care i.e., Health Care and Alliancebernstein go up and down completely randomly.
Pair Corralation between Health Care and Alliancebernstein
Assuming the 90 days horizon Health Care Fund is expected to generate 2.56 times more return on investment than Alliancebernstein. However, Health Care is 2.56 times more volatile than Alliancebernstein Global Highome. It trades about 0.02 of its potential returns per unit of risk. Alliancebernstein Global Highome is currently generating about 0.03 per unit of risk. If you would invest 2,745 in Health Care Fund on October 9, 2024 and sell it today you would earn a total of 164.00 from holding Health Care Fund or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. Alliancebernstein Global Higho
Performance |
| Timeline |
| Health Care Fund |
| Alliancebernstein |
Health Care and Alliancebernstein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Alliancebernstein
The main advantage of trading using opposite Health Care and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Alliancebernstein 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 Alliancebernstein will offset losses from the drop in Alliancebernstein's long position.| Health Care vs. Eip Growth And | Health Care vs. Rbb Fund | Health Care vs. Ab Impact Municipal | Health Care vs. Rational Dividend Capture |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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