Correlation Between Guidemark Large and Alliancebernstein

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

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

Diversification Opportunities for Guidemark Large and Alliancebernstein

0.85

Correlation Coefficient

Guidemark Large  Alliancebernstein

Very poor diversification

The 3 months correlation between Guidemark and Alliancebernstein is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Guidemark Large 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 Guidemark Large Cap 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 Guidemark Large i.e., Guidemark Large and Alliancebernstein go up and down completely randomly.

Pair Corralation between Guidemark Large and Alliancebernstein

Assuming the 90 days horizon Guidemark Large is expected to generate 1.33 times less return on investment than Alliancebernstein. In addition to that, Guidemark Large is 1.13 times more volatile than Alliancebernstein Global High. It trades about 0.07 of its total potential returns per unit of risk. Alliancebernstein Global High is currently generating about 0.1 per unit of volatility. If you would invest  1,028  in Alliancebernstein Global High on March 4, 2024 and sell it today you would earn a total of  40.00  from holding Alliancebernstein Global High or generate 3.89% return on investment over 90 days.

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

Guidemark Large Cap  vs.  Alliancebernstein Global High

Guidemark Large Cap

Risk-Adjusted Performance

5 of 100

Modest

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

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alliancebernstein Global High are ranked lower than 7 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guidemark Large and Alliancebernstein

The main advantage of trading using opposite Guidemark Large and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Large 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 Guidemark Large Cap 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 Transaction History module to view history of all your transactions and understand their impact on performance.