Correlation Between AllianceBernstein and Lion Financial

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

Diversification Opportunities for AllianceBernstein and Lion Financial

-0.7

Correlation Coefficient

AllianceBernstein  Lion Financial

Excellent diversification

The 3 months correlation between AllianceBernstein and Lion is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Lion Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Financial Group 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 Lion Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Financial Group has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Lion Financial go up and down completely randomly.

Pair Corralation between AllianceBernstein and Lion Financial

Allowing for the 90-day total investment horizon AllianceBernstein is expected to generate 2.78 times less return on investment than Lion Financial. But when comparing it to its historical volatility, AllianceBernstein Holding LP is 6.96 times less risky than Lion Financial. It trades about 0.06 of its potential returns per unit of risk. Lion Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.75  in Lion Financial Group on September 28, 2024 and sell it today you would lose (0.05) from holding Lion Financial Group or give up 6.67% of portfolio value over 90 days.

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

AllianceBernstein Holding LP  vs.  Lion Financial Group

AllianceBernstein

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, AllianceBernstein may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lion Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with AllianceBernstein and Lion Financial

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

The idea behind AllianceBernstein Holding LP and Lion Financial Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.