Correlation Between American Beacon and Alliancebernstein
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Alliancebernstein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Twentyfour and Alliancebernstein National Municipal, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Alliancebernstein.
Diversification Opportunities for American Beacon and Alliancebernstein
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Alliancebernstein is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Twentyfour and Alliancebernstein National Mun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and American Beacon 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 American Beacon Twentyfour 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 American Beacon i.e., American Beacon and Alliancebernstein go up and down completely randomly.
Pair Corralation between American Beacon and Alliancebernstein
Assuming the 90 days horizon American Beacon is expected to generate 2.03 times less return on investment than Alliancebernstein. But when comparing it to its historical volatility, American Beacon Twentyfour is 5.61 times less risky than Alliancebernstein. It trades about 0.24 of its potential returns per unit of risk. Alliancebernstein National Municipal is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Alliancebernstein National Municipal on September 1, 2024 and sell it today you would earn a total of 89.00 from holding Alliancebernstein National Municipal or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
American Beacon Twentyfour vs. Alliancebernstein National Mun
Performance |
| Timeline |
| American Beacon Twen |
| Alliancebernstein |
American Beacon and Alliancebernstein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Alliancebernstein
The main advantage of trading using opposite American Beacon and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. Alliancebernstein National Municipal | American Beacon vs. Franklin High Yield | American Beacon vs. Ishares Municipal Bond | American Beacon vs. T Rowe Price |
| Alliancebernstein vs. Eaton Vance Short | Alliancebernstein vs. Allianzgi Diversified Income | Alliancebernstein vs. Ares Dynamic Credit | Alliancebernstein vs. DWS Municipal Income |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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