Correlation Between AllianceBernstein and Main Street

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

Diversification Opportunities for AllianceBernstein and Main Street

0.24

Correlation Coefficient

AllianceBernstein  Main Street

Modest diversification

The 3 months correlation between AllianceBernstein and Main is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AllianceBernstein Holding LP and Main Street Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Capital 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 Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Capital has no effect on the direction of AllianceBernstein i.e., AllianceBernstein and Main Street go up and down completely randomly.

Pair Corralation between AllianceBernstein and Main Street

Allowing for the 90-day total investment horizon AllianceBernstein Holding LP is expected to under-perform the Main Street. In addition to that, AllianceBernstein is 1.92 times more volatile than Main Street Capital. It trades about -0.13 of its total potential returns per unit of risk. Main Street Capital is currently generating about 0.45 per unit of volatility. If you would invest  4,677  in Main Street Capital on February 4, 2024 and sell it today you would earn a total of  360.00  from holding Main Street Capital or generate 7.7% return on investment over 90 days.

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

AllianceBernstein Holding LP  vs.  Main Street Capital

AllianceBernstein

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Main Street Capital

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AllianceBernstein and Main Street

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

The idea behind AllianceBernstein Holding LP and Main Street Capital 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.