Correlation Between AllianceBernstein and Metal Sky

Can any of the company-specific risk be diversified away by investing in both AllianceBernstein and Metal Sky 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 Metal Sky 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 Metal Sky Star, you can compare the effects of market volatilities on AllianceBernstein and Metal Sky 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 Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of AllianceBernstein and Metal Sky.

Diversification Opportunities for AllianceBernstein and Metal Sky

-0.36

Correlation Coefficient

AllianceBernstein  Metal Sky

Very good diversification

The 3 months correlation between AllianceBernstein and Metal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Metal Sky go up and down completely randomly.

Pair Corralation between AllianceBernstein and Metal Sky

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to generate 3.65 times more return on investment than Metal Sky. However, AllianceBernstein is 3.65 times more volatile than Metal Sky Star. It trades about 0.24 of its potential returns per unit of risk. Metal Sky Star is currently generating about -0.09 per unit of risk. If you would invest  3,187  in AllianceBernstein Holding LP on August 4, 2024 and sell it today you would earn a total of  556.00  from holding AllianceBernstein Holding LP or generate 17.45% return on investment over 90 days.

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

AllianceBernstein Holding LP  vs.  Metal Sky Star

AllianceBernstein

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, AllianceBernstein sustained solid returns over the last few months and may actually be approaching a breakup point.

Metal Sky Star

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metal Sky Star has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Metal Sky is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AllianceBernstein and Metal Sky

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

The idea behind AllianceBernstein Holding LP and Metal Sky Star 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.