Correlation Between Bank of New York and AllianceBernstein
Can any of the company-specific risk be diversified away by investing in both Bank of New York 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 Bank of New York and AllianceBernstein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of New and AllianceBernstein Holding LP, you can compare the effects of market volatilities on Bank of New York 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 Bank of New York with a short position of AllianceBernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and AllianceBernstein.
Diversification Opportunities for Bank of New York and AllianceBernstein
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and AllianceBernstein is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and AllianceBernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBernstein and Bank of New York 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 Bank of New 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 Bank of New York i.e., Bank of New York and AllianceBernstein go up and down completely randomly.
Pair Corralation between Bank of New York and AllianceBernstein
Allowing for the 90-day total investment horizon Bank of New is expected to generate 0.81 times more return on investment than AllianceBernstein. However, Bank of New is 1.24 times less risky than AllianceBernstein. It trades about -0.07 of its potential returns per unit of risk. AllianceBernstein Holding LP is currently generating about -0.15 per unit of risk. If you would invest 5,728 in Bank of New on January 21, 2024 and sell it today you would lose (99.00) from holding Bank of New or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. AllianceBernstein Holding LP
Performance |
| Timeline |
| Bank of New York |
| AllianceBernstein |
Bank of New York and AllianceBernstein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and AllianceBernstein
The main advantage of trading using opposite Bank of New York and AllianceBernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York 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.| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
| AllianceBernstein vs. Brightsphere Investment Group | AllianceBernstein vs. Affiliated Managers Group | AllianceBernstein vs. Bain Capital Specialty | AllianceBernstein vs. BlackRock Capital Allocation |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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