Correlation Between AllianceBernstein and Gabelli MultiMedia

Can any of the company-specific risk be diversified away by investing in both AllianceBernstein and Gabelli MultiMedia 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 Gabelli MultiMedia 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 Gabelli MultiMedia Mutual, you can compare the effects of market volatilities on AllianceBernstein and Gabelli MultiMedia 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 Gabelli MultiMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of AllianceBernstein and Gabelli MultiMedia.

Diversification Opportunities for AllianceBernstein and Gabelli MultiMedia

-0.56

Correlation Coefficient

AllianceBernstein  Gabelli MultiMedia

Excellent diversification

The 3 months correlation between AllianceBernstein and Gabelli is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Gabelli MultiMedia Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli MultiMedia Mutual 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 Gabelli MultiMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli MultiMedia Mutual has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Gabelli MultiMedia go up and down completely randomly.

Pair Corralation between AllianceBernstein and Gabelli MultiMedia

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 1.64 times more return on investment than Gabelli MultiMedia. However, AllianceBernstein is 1.64 times more volatile than Gabelli MultiMedia Mutual. It trades about 0.12 of its potential returns per unit of risk. Gabelli MultiMedia Mutual is currently generating about 0.09 per unit of risk. If you would invest  3,299  in AllianceBernstein Holding LP on September 4, 2024 and sell it today you would earn a total of  340.00  from holding AllianceBernstein Holding LP or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AllianceBernstein Holding LP  vs.  Gabelli MultiMedia Mutual

AllianceBernstein

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, AllianceBernstein may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gabelli MultiMedia Mutual

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli MultiMedia Mutual are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Gabelli MultiMedia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AllianceBernstein and Gabelli MultiMedia

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

The idea behind AllianceBernstein Holding LP and Gabelli MultiMedia Mutual 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.