Correlation Between AllianceBernstein and Gladstone Investment

Can any of the company-specific risk be diversified away by investing in both AllianceBernstein and Gladstone Investment 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 Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AllianceBernstein Holding LP and Gladstone Investment, you can compare the effects of market volatilities on AllianceBernstein and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AllianceBernstein and Gladstone Investment.

Diversification Opportunities for AllianceBernstein and Gladstone Investment

0.62

Correlation Coefficient

AllianceBernstein  Gladstone Investment

Poor diversification

The 3 months correlation between AllianceBernstein and Gladstone is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Holding LP are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Gladstone Investment go up and down completely randomly.

Pair Corralation between AllianceBernstein and Gladstone Investment

Allowing for the 90-day total investment horizon AllianceBernstein is expected to generate 1.59 times less return on investment than Gladstone Investment. In addition to that, AllianceBernstein is 1.13 times more volatile than Gladstone Investment. It trades about 0.08 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.14 per unit of volatility. If you would invest  1,223  in Gladstone Investment on September 15, 2024 and sell it today you would earn a total of  132.00  from holding Gladstone Investment or generate 10.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AllianceBernstein Holding LP  vs.  Gladstone Investment

AllianceBernstein

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, AllianceBernstein may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gladstone Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AllianceBernstein and Gladstone Investment

The main advantage of trading using opposite AllianceBernstein and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AllianceBernstein position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.

The idea behind AllianceBernstein Holding LP and Gladstone Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..