Correlation Between AllianceBernstein and Income Opportunity

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

Diversification Opportunities for AllianceBernstein and Income Opportunity

0.4

Correlation Coefficient

AllianceBernstein  Income Opportunity

Very weak diversification

The 3 months correlation between AllianceBernstein and Income is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Income Opportunity Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Opportunity Realty 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 Income Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Opportunity Realty has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Income Opportunity go up and down completely randomly.

Pair Corralation between AllianceBernstein and Income Opportunity

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to under-perform the Income Opportunity. But the stock apears to be less risky and, when comparing its historical volatility, AllianceBernstein Holding LP is 1.29 times less risky than Income Opportunity. The stock trades about -0.08 of its potential returns per unit of risk. The Income Opportunity Realty is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,670  in Income Opportunity Realty on January 31, 2024 and sell it today you would earn a total of  8.00  from holding Income Opportunity Realty or generate 0.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	61.9%
Values	Daily Returns

AllianceBernstein Holding LP  vs.  Income Opportunity Realty

AllianceBernstein

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AllianceBernstein Holding LP are ranked lower than 2 (%) 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.

Income Opportunity Realty

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Income Opportunity Realty are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Income Opportunity reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AllianceBernstein and Income Opportunity

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

The idea behind AllianceBernstein Holding LP and Income Opportunity Realty 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.