Correlation Between Life Storage and Alliancebernstein

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

Diversification Opportunities for Life Storage and Alliancebernstein

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Life Storage and Alliancebernstein is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Life Storage and Alliancebernstein Holding LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Life Storage 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 Life Storage 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 Life Storage i.e., Life Storage and Alliancebernstein go up and down completely randomly.

Pair Corralation between Life Storage and Alliancebernstein

Considering the 90-day investment horizon Life Storage is expected to under-perform the Alliancebernstein. But the stock apears to be less risky and, when comparing its historical volatility, Life Storage is 1.07 times less risky than Alliancebernstein. The stock trades about -0.47 of its potential returns per unit of risk. The Alliancebernstein Holding LP is currently generating about -0.44 of returns per unit of risk over similar time horizon. If you would invest  4,265  in Alliancebernstein Holding LP on July 8, 2022 and sell it today you would lose (707.00)  from holding Alliancebernstein Holding LP or give up 16.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Life Storage  vs.  Alliancebernstein Holding LP

 Performance (%) 
       Timeline  
Life Storage 
Life Storage Performance
0 of 100
Over the last 90 days Life Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Life Storage is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

Life Storage 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

Life Storage and Alliancebernstein Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Life Storage and Alliancebernstein

The main advantage of trading using opposite Life Storage and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Storage 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.
Life Storage vs. JP Morgan Chase
The idea behind Life Storage 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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