Correlation Between Alliancebernstein and Stone Harbor

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Can any of the company-specific risk be diversified away by investing in both Alliancebernstein and Stone Harbor 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 Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliancebernstein Global High and Stone Harbor Emerging, you can compare the effects of market volatilities on Alliancebernstein and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Stone Harbor.

Diversification Opportunities for Alliancebernstein and Stone Harbor

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alliancebernstein and Stone is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging 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 Global High are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Stone Harbor go up and down completely randomly.

Pair Corralation between Alliancebernstein and Stone Harbor

Considering the 90-day investment horizon Alliancebernstein Global High is expected to generate 0.38 times more return on investment than Stone Harbor. However, Alliancebernstein Global High is 2.65 times less risky than Stone Harbor. It trades about 0.01 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about -0.05 per unit of risk. If you would invest  1,098  in Alliancebernstein Global High on September 3, 2024 and sell it today you would earn a total of  3.00  from holding Alliancebernstein Global High or generate 0.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alliancebernstein Global High  vs.  Stone Harbor Emerging

 Performance 
       Timeline  
Alliancebernstein 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alliancebernstein Global High has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Stone Harbor Emerging 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Stone Harbor Emerging has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable fundamental indicators, Stone Harbor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Alliancebernstein and Stone Harbor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alliancebernstein and Stone Harbor

The main advantage of trading using opposite Alliancebernstein and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliancebernstein position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.
The idea behind Alliancebernstein Global High and Stone Harbor Emerging 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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