Correlation Between Abacus Life and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Abacus Life and Adient PLC 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 Abacus Life and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abacus Life and Adient PLC, you can compare the effects of market volatilities on Abacus Life and Adient PLC 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 Abacus Life with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abacus Life and Adient PLC.
Diversification Opportunities for Abacus Life and Adient PLC
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Abacus and Adient is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Abacus Life 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 Abacus Life are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Abacus Life i.e., Abacus Life and Adient PLC go up and down completely randomly.
Pair Corralation between Abacus Life and Adient PLC
Considering the 90-day investment horizon Abacus Life is expected to generate 0.94 times more return on investment than Adient PLC. However, Abacus Life is 1.06 times less risky than Adient PLC. It trades about -0.02 of its potential returns per unit of risk. Adient PLC is currently generating about -0.27 per unit of risk. If you would invest 782.00 in Abacus Life on October 9, 2024 and sell it today you would lose (10.00) from holding Abacus Life or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abacus Life vs. Adient PLC
Performance |
| Timeline |
| Abacus Life |
| Adient PLC |
Abacus Life and Adient PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abacus Life and Adient PLC
The main advantage of trading using opposite Abacus Life and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abacus Life position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.| Abacus Life vs. FG Annuities Life | Abacus Life vs. Globe Life | Abacus Life vs. MetLife Preferred Stock | Abacus Life vs. MetLife Preferred Stock |
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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 the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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