Correlation Between Utilities Fund and Alliancebernstein

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

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

Diversification Opportunities for Utilities Fund and Alliancebernstein

0.05

Correlation Coefficient

Utilities Fund  Alliancebernstein

Significant diversification

The 3 months correlation between Utilities and Alliancebernstein is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Class and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Utilities Fund 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 Utilities Fund Class 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 Utilities Fund i.e., Utilities Fund and Alliancebernstein go up and down completely randomly.

Pair Corralation between Utilities Fund and Alliancebernstein

Assuming the 90 days horizon Utilities Fund Class is expected to generate 2.26 times more return on investment than Alliancebernstein. However, Utilities Fund is 2.26 times more volatile than Alliancebernstein Global High. It trades about 0.11 of its potential returns per unit of risk. Alliancebernstein Global High is currently generating about 0.0 per unit of risk. If you would invest  4,891  in Utilities Fund Class on September 4, 2024 and sell it today you would earn a total of  309.00  from holding Utilities Fund Class or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Utilities Fund Class  vs.  Alliancebernstein Global High

Utilities Fund Class

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Fund Class are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, Utilities Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alliancebernstein

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Utilities Fund and Alliancebernstein

The main advantage of trading using opposite Utilities Fund and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund 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 Utilities Fund Class 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.