Correlation Between AllianceBernstein and Chimera Investment

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

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

Diversification Opportunities for AllianceBernstein and Chimera Investment

0.66

Correlation Coefficient

AllianceBernstein  Chimera Investment

Poor diversification

The 3 months correlation between AllianceBernstein and Chimera is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment 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 Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Chimera Investment go up and down completely randomly.

Pair Corralation between AllianceBernstein and Chimera Investment

Allowing for the 90-day total investment horizon AllianceBernstein is expected to generate 2.08 times less return on investment than Chimera Investment. But when comparing it to its historical volatility, AllianceBernstein Holding LP is 1.54 times less risky than Chimera Investment. It trades about 0.02 of its potential returns per unit of risk. Chimera Investment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,272  in Chimera Investment on June 22, 2024 and sell it today you would earn a total of  385.00  from holding Chimera Investment or generate 30.27% return on investment over 90 days.

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

AllianceBernstein Holding LP  vs.  Chimera Investment

AllianceBernstein

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Chimera Investment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chimera Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Chimera Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AllianceBernstein and Chimera Investment

The main advantage of trading using opposite AllianceBernstein and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AllianceBernstein position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.

The idea behind AllianceBernstein Holding LP and Chimera Investment 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 the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..