Correlation Between AllianceBernstein and Papaya Growth

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

Diversification Opportunities for AllianceBernstein and Papaya Growth

0.25

Correlation Coefficient

AllianceBernstein  Papaya Growth

Modest diversification

The 3 months correlation between AllianceBernstein and Papaya is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Papaya Growth Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papaya Growth Opportunity 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 Papaya Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papaya Growth Opportunity has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Papaya Growth go up and down completely randomly.

Pair Corralation between AllianceBernstein and Papaya Growth

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 13.55 times more return on investment than Papaya Growth. However, AllianceBernstein is 13.55 times more volatile than Papaya Growth Opportunity. It trades about 0.08 of its potential returns per unit of risk. Papaya Growth Opportunity is currently generating about 0.14 per unit of risk. If you would invest  3,381  in AllianceBernstein Holding LP on September 17, 2024 and sell it today you would earn a total of  214.00  from holding AllianceBernstein Holding LP or generate 6.33% return on investment over 90 days.

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

AllianceBernstein Holding LP  vs.  Papaya Growth Opportunity

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.

Papaya Growth Opportunity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Papaya Growth Opportunity are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Papaya Growth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AllianceBernstein and Papaya Growth

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

The idea behind AllianceBernstein Holding LP and Papaya Growth Opportunity 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.