Correlation Between JP Morgan and Alliancebernstein

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

Diversification Opportunities for JP Morgan and Alliancebernstein

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between JP Morgan and Alliancebernstein is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and Alliancebernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and JP Morgan 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 JP Morgan Chase 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 JP Morgan i.e., JP Morgan and Alliancebernstein go up and down completely randomly.

Pair Corralation between JP Morgan and Alliancebernstein

Considering the 90-day investment horizon JP Morgan Chase is expected to under-perform the Alliancebernstein. But the stock apears to be less risky and, when comparing its historical volatility, JP Morgan Chase is 1.22 times less risky than Alliancebernstein. The stock trades about -0.01 of its potential returns per unit of risk. The Alliancebernstein Holding LP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,985  in Alliancebernstein Holding LP on September 1, 2022 and sell it today you would lose (26.00)  from holding Alliancebernstein Holding LP or give up 0.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

JP Morgan Chase  vs.  Alliancebernstein Holding LP

 Performance (%) 
       Timeline  
JP Morgan Chase 
JP Morgan Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, JP Morgan revealed solid returns over the last few months and may actually be approaching a breakup point.

JP Morgan 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 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.

Alliancebernstein Price Channel

JP Morgan and Alliancebernstein Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JP Morgan and Alliancebernstein

The main advantage of trading using opposite JP Morgan and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan 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 JP Morgan Chase 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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