Correlation Between BlackRock and AllianceBernstein

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

By analyzing existing cross correlation between BlackRock and AllianceBernstein Holding LP, you can compare the effects of market volatilities on BlackRock 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 BlackRock with a short position of AllianceBernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and AllianceBernstein.

Diversification Opportunities for BlackRock and AllianceBernstein

0.66

Correlation Coefficient

BlackRock  AllianceBernstein

Poor diversification

The 3 months correlation between BlackRock and AllianceBernstein is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and AllianceBernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBernstein and BlackRock 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 BlackRock 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 BlackRock i.e., BlackRock and AllianceBernstein go up and down completely randomly.

Pair Corralation between BlackRock and AllianceBernstein

Considering the 90-day investment horizon BlackRock is expected to generate 0.87 times more return on investment than AllianceBernstein. However, BlackRock is 1.15 times less risky than AllianceBernstein. It trades about 0.13 of its potential returns per unit of risk. AllianceBernstein Holding LP is currently generating about 0.1 per unit of risk. If you would invest  60,689  in BlackRock on January 20, 2024 and sell it today you would earn a total of  14,309  from holding BlackRock or generate 23.58% return on investment over 90 days.

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

BlackRock  vs.  AllianceBernstein Holding LP

BlackRock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

AllianceBernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AllianceBernstein Holding LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, AllianceBernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and AllianceBernstein

The main advantage of trading using opposite BlackRock and AllianceBernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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 BlackRock 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.