Correlation Between Jefferies Financial and Alliancebernstein

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Can any of the company-specific risk be diversified away by investing in both Jefferies Financial and Alliancebernstein 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 Jefferies Financial and Alliancebernstein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jefferies Financial Group and Alliancebernstein Holding LP, you can compare the effects of market volatilities on Jefferies Financial and Alliancebernstein 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 Jefferies Financial with a short position of Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jefferies Financial and Alliancebernstein.

Diversification Opportunities for Jefferies Financial and Alliancebernstein

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Jefferies and Alliancebernstein is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and Alliancebernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Jefferies Financial 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 Jefferies Financial Group are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Jefferies Financial i.e., Jefferies Financial and Alliancebernstein go up and down completely randomly.

Pair Corralation between Jefferies Financial and Alliancebernstein

Considering the 90-day investment horizon Jefferies Financial Group is expected to generate 1.07 times more return on investment than Alliancebernstein. However, Jefferies Financial is 1.07 times more volatile than Alliancebernstein Holding LP. It trades about 0.03 of its potential returns per unit of risk. Alliancebernstein Holding LP is currently generating about 0.02 per unit of risk. If you would invest  2,828  in Jefferies Financial Group on July 8, 2022 and sell it today you would earn a total of  434.00  from holding Jefferies Financial Group or generate 15.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Jefferies Financial Group  vs.  Alliancebernstein Holding LP

 Performance (%) 
       Timeline  
Jefferies Financial 
Jefferies Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Jefferies Financial Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Jefferies Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jefferies Price Channel

Alliancebernstein 
Alliancebernstein Performance
0 of 100
Over the last 90 days Alliancebernstein Holding LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Alliancebernstein Price Channel

Jefferies Financial and Alliancebernstein Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jefferies Financial and Alliancebernstein

The main advantage of trading using opposite Jefferies Financial and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jefferies Financial position performs unexpectedly, Alliancebernstein 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 Alliancebernstein will offset losses from the drop in Alliancebernstein's long position.
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The idea behind Jefferies Financial Group and Alliancebernstein Holding LP 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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