Correlation Between Aqr Global and Alliancebernstein

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

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

Diversification Opportunities for Aqr Global and Alliancebernstein

0.61

Correlation Coefficient

Aqr Global  Alliancebernstein

Poor diversification

The 3 months correlation between Aqr and Alliancebernstein is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Global Equity and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Aqr Global 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 Aqr Global Equity 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 Aqr Global i.e., Aqr Global and Alliancebernstein go up and down completely randomly.

Pair Corralation between Aqr Global and Alliancebernstein

Assuming the 90 days horizon Aqr Global Equity is expected to generate 1.04 times more return on investment than Alliancebernstein. However, Aqr Global is 1.04 times more volatile than Alliancebernstein Global High. It trades about -0.09 of its potential returns per unit of risk. Alliancebernstein Global High is currently generating about -0.14 per unit of risk. If you would invest  1,086  in Aqr Global Equity on January 30, 2024 and sell it today you would lose (17.00) from holding Aqr Global Equity or give up 1.57% of portfolio value over 90 days.

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

Aqr Global Equity  vs.  Alliancebernstein Global High

Aqr Global Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aqr Global and Alliancebernstein

The main advantage of trading using opposite Aqr Global and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Global 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 Aqr Global Equity 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.