Correlation Between Alliancebernstein and Emerging Markets

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

By analyzing existing cross correlation between Alliancebernstein National Municipal and Emerging Markets Debt, you can compare the effects of market volatilities on Alliancebernstein and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Emerging Markets.

Diversification Opportunities for Alliancebernstein and Emerging Markets

0.88

Correlation Coefficient

Alliancebernstein  Emerging Markets

Very poor diversification

The 3 months correlation between Alliancebernstein and Emerging is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Emerging Markets Debt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Debt 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 National Municipal are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Debt has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Emerging Markets go up and down completely randomly.

Pair Corralation between Alliancebernstein and Emerging Markets

Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to generate 2.07 times more return on investment than Emerging Markets. However, Alliancebernstein is 2.07 times more volatile than Emerging Markets Debt. It trades about 0.03 of its potential returns per unit of risk. Emerging Markets Debt is currently generating about 0.04 per unit of risk. If you would invest  997.00  in Alliancebernstein National Municipal on September 30, 2024 and sell it today you would earn a total of  85.00  from holding Alliancebernstein National Municipal or generate 8.53% return on investment over 90 days.

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

Alliancebernstein National Mun  vs.  Emerging Markets Debt

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein National Municipal has generated negative risk-adjusted returns adding no value to fund investors. Despite latest fragile performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Emerging Markets Debt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Debt has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alliancebernstein and Emerging Markets

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

The idea behind Alliancebernstein National Municipal and Emerging Markets Debt 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.