Correlation Between AllianceBernstein and Virtu Financial

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

Diversification Opportunities for AllianceBernstein and Virtu Financial

0.25

Correlation Coefficient

AllianceBernstein  Virtu Financial

Modest diversification

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

Pair Corralation between AllianceBernstein and Virtu Financial

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 0.95 times more return on investment than Virtu Financial. However, AllianceBernstein Holding LP is 1.05 times less risky than Virtu Financial. It trades about 0.06 of its potential returns per unit of risk. Virtu Financial is currently generating about -0.03 per unit of risk. If you would invest  3,667  in AllianceBernstein Holding LP on September 28, 2024 and sell it today you would earn a total of  61.00  from holding AllianceBernstein Holding LP or generate 1.66% 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.  Virtu Financial

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.

Virtu Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Virtu Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AllianceBernstein and Virtu Financial

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

The idea behind AllianceBernstein Holding LP and Virtu Financial 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.