Correlation Between Alliancebernstein and Nuveen Massachusetts

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

Diversification Opportunities for Alliancebernstein and Nuveen Massachusetts

0.8

Correlation Coefficient

Alliancebernstein  Nuveen Massachusetts

Very poor diversification

The 3 months correlation between Alliancebernstein and Nuveen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Nuveen Massachusetts Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Massachusetts 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 Nuveen Massachusetts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Massachusetts has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Nuveen Massachusetts go up and down completely randomly.

Pair Corralation between Alliancebernstein and Nuveen Massachusetts

Considering the 90-day investment horizon Alliancebernstein is expected to generate 1.08 times less return on investment than Nuveen Massachusetts. In addition to that, Alliancebernstein is 3.05 times more volatile than Nuveen Massachusetts Municipal. It trades about 0.02 of its total potential returns per unit of risk. Nuveen Massachusetts Municipal is currently generating about 0.07 per unit of volatility. If you would invest  925.00  in Nuveen Massachusetts Municipal on September 5, 2024 and sell it today you would earn a total of  9.00  from holding Nuveen Massachusetts Municipal or generate 0.97% 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.  Nuveen Massachusetts Municipal

Alliancebernstein

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alliancebernstein National Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Massachusetts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Massachusetts Municipal are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nuveen Massachusetts 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 Nuveen Massachusetts

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

The idea behind Alliancebernstein National Municipal and Nuveen Massachusetts Municipal 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..