Correlation Between Diamond Hill and AllianceBernstein

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Can any of the company-specific risk be diversified away by investing in both Diamond Hill 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 Diamond Hill and AllianceBernstein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Investment and AllianceBernstein Holding LP, you can compare the effects of market volatilities on Diamond Hill 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 Diamond Hill with a short position of AllianceBernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and AllianceBernstein.

Diversification Opportunities for Diamond Hill and AllianceBernstein

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Diamond and AllianceBernstein is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and AllianceBernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBernstein and Diamond Hill 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 Diamond Hill Investment 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 Diamond Hill i.e., Diamond Hill and AllianceBernstein go up and down completely randomly.

Pair Corralation between Diamond Hill and AllianceBernstein

Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 0.88 times more return on investment than AllianceBernstein. However, Diamond Hill Investment is 1.14 times less risky than AllianceBernstein. It trades about 0.17 of its potential returns per unit of risk. AllianceBernstein Holding LP is currently generating about 0.09 per unit of risk. If you would invest  14,527  in Diamond Hill Investment on December 29, 2023 and sell it today you would earn a total of  775.00  from holding Diamond Hill Investment or generate 5.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Diamond Hill Investment  vs.  AllianceBernstein Holding LP

 Performance 
       Timeline  
Diamond Hill Investment 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Diamond Hill Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Diamond Hill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
AllianceBernstein 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, AllianceBernstein sustained solid returns over the last few months and may actually be approaching a breakup point.

Diamond Hill and AllianceBernstein Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Diamond Hill and AllianceBernstein

The main advantage of trading using opposite Diamond Hill and AllianceBernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill 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 Diamond Hill Investment and AllianceBernstein Holding LP 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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