Correlation Between Legg Mason and AllianceBernstein

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

Diversification Opportunities for Legg Mason and AllianceBernstein

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Legg and AllianceBernstein is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason and AllianceBernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBernstein and Legg Mason 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 Legg Mason 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 Legg Mason i.e., Legg Mason and AllianceBernstein go up and down completely randomly.

Pair Corralation between Legg Mason and AllianceBernstein

If you would invest  3,375  in AllianceBernstein Holding LP on December 29, 2023 and sell it today you would earn a total of  100.00  from holding AllianceBernstein Holding LP or generate 2.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Legg Mason  vs.  AllianceBernstein Holding LP

 Performance 
       Timeline  
Legg Mason 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Legg Mason has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Legg Mason is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
AllianceBernstein 

Risk-Adjusted Performance

12 of 100

 
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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.

Legg Mason and AllianceBernstein Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Legg Mason and AllianceBernstein

The main advantage of trading using opposite Legg Mason and AllianceBernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason 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 Legg Mason 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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