Correlation Between Multi Index and Alliancebernstein

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

By analyzing existing cross correlation between Multi Index 2050 Lifetime and Alliancebernstein Global High, you can compare the effects of market volatilities on Multi Index and Alliancebernstein 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 Multi Index with a short position of Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Index and Alliancebernstein.

Diversification Opportunities for Multi Index and Alliancebernstein

0.12

Correlation Coefficient

Multi Index  Alliancebernstein

Average diversification

The 3 months correlation between Multi and Alliancebernstein is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Multi Index 2050 Lifetime and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Multi Index 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 Multi Index 2050 Lifetime are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Multi Index i.e., Multi Index and Alliancebernstein go up and down completely randomly.

Pair Corralation between Multi Index and Alliancebernstein

Assuming the 90 days horizon Multi Index 2050 Lifetime is expected to generate 1.47 times more return on investment than Alliancebernstein. However, Multi Index is 1.47 times more volatile than Alliancebernstein Global High. It trades about 0.15 of its potential returns per unit of risk. Alliancebernstein Global High is currently generating about 0.02 per unit of risk. If you would invest  1,462  in Multi Index 2050 Lifetime on September 12, 2024 and sell it today you would earn a total of  82.00  from holding Multi Index 2050 Lifetime or generate 5.61% return on investment over 90 days.

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

Multi Index 2050 Lifetime  vs.  Alliancebernstein Global High

Multi Index 2050

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2050 Lifetime are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alliancebernstein

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alliancebernstein Global High are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Alliancebernstein is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Multi Index and Alliancebernstein

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

The idea behind Multi Index 2050 Lifetime and Alliancebernstein Global High 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.