Correlation Between Alliancebernstein and Bank of New York

By analyzing existing cross correlation between Alliancebernstein Holding LP and Bank Of New, you can compare the effects of market volatilities on Alliancebernstein and Bank of New York 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 Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Bank of New York.

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

Diversification Opportunities for Alliancebernstein and Bank of New York

0.78
  Correlation Coefficient
Alliancebernstein
Bank of New York

Poor diversification

The 3 months correlation between Alliancebernstein and Bank of New York is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Holding LP and Bank Of New in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Holding LP are associated (or correlated) with Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Bank of New York go up and down completely randomly.

Pair Corralation between Alliancebernstein and Bank of New York

Allowing for the 90-day total investment horizon Alliancebernstein Holding LP is expected to generate 1.8 times more return on investment than Bank of New York. However, Alliancebernstein is 1.8 times more volatile than Bank Of New. It trades about -0.06 of its potential returns per unit of risk. Bank Of New is currently generating about -0.46 per unit of risk. If you would invest  5,219  in Alliancebernstein Holding LP on June 30, 2021 and sell it today you would lose (137.00)  from holding Alliancebernstein Holding LP or give up 2.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alliancebernstein Holding LP  vs.  Bank Of New

 Performance (%) 
      Timeline 
Alliancebernstein 
 Alliancebernstein Performance
0 of 100
Over the last 90 days Alliancebernstein Holding LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat inconsistent fundamental drivers, Alliancebernstein may actually be approaching a critical reversion point that can send shares even higher in October 2021.
Bank of New York 
 Bank of New York Performance
0 of 100
Over the last 90 days Bank Of New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Bank of New York is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Alliancebernstein and Bank of New York Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alliancebernstein and Bank of New York

The main advantage of trading using opposite Alliancebernstein and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliancebernstein position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.
The idea behind Alliancebernstein Holding LP and Bank Of New 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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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