Correlation Between Alliancebernstein and Wells Fargo

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

By analyzing existing cross correlation between Alliancebernstein National Municipal and Wells Fargo Premier, you can compare the effects of market volatilities on Alliancebernstein and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliancebernstein and Wells Fargo.

Diversification Opportunities for Alliancebernstein and Wells Fargo

-0.44

Correlation Coefficient

Alliancebernstein  Wells Fargo

Very good diversification

The 3 months correlation between Alliancebernstein and Wells is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein National Mun and Wells Fargo Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Premier 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 National Municipal are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Premier has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Wells Fargo go up and down completely randomly.

Pair Corralation between Alliancebernstein and Wells Fargo

Considering the 90-day investment horizon Alliancebernstein National Municipal is expected to under-perform the Wells Fargo. But the fund apears to be less risky and, when comparing its historical volatility, Alliancebernstein National Municipal is 1.57 times less risky than Wells Fargo. The fund trades about -0.01 of its potential returns per unit of risk. The Wells Fargo Premier is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,401  in Wells Fargo Premier on September 13, 2024 and sell it today you would earn a total of  199.00  from holding Wells Fargo Premier or generate 14.2% return on investment over 90 days.

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

Alliancebernstein National Mun  vs.  Wells Fargo Premier

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein National Municipal has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wells Fargo Premier

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Premier are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Wells Fargo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliancebernstein and Wells Fargo

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

The idea behind Alliancebernstein National Municipal and Wells Fargo Premier 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.