Correlation Between Ab Value and First Trust
Can any of the company-specific risk be diversified away by investing in both Ab Value and First Trust 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 Ab Value and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Value Fund and First Trust Preferred, you can compare the effects of market volatilities on Ab Value and First Trust 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 Ab Value with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and First Trust.
Diversification Opportunities for Ab Value and First Trust
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABVCX and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Ab Value 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 Ab Value Fund are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Ab Value i.e., Ab Value and First Trust go up and down completely randomly.
Pair Corralation between Ab Value and First Trust
Assuming the 90 days horizon Ab Value Fund is expected to generate 4.65 times more return on investment than First Trust. However, Ab Value is 4.65 times more volatile than First Trust Preferred. It trades about 0.24 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.17 per unit of risk. If you would invest 1,873 in Ab Value Fund on September 3, 2024 and sell it today you would earn a total of 203.00 from holding Ab Value Fund or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Value Fund vs. First Trust Preferred
Performance |
| Timeline |
| Ab Value Fund |
| First Trust Preferred |
Ab Value and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Value and First Trust
The main advantage of trading using opposite Ab Value and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Ab Value vs. Vanguard Value Index | Ab Value vs. Dodge Cox Stock | Ab Value vs. American Funds American | Ab Value vs. American Funds American |
| First Trust vs. Inflation Protected Bond Fund | First Trust vs. Oklahoma College Savings | First Trust vs. Western Asset Inflation | First Trust vs. Ab Bond Inflation |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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