Correlation Between Ab Value and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Ab Value and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on Ab Value and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Growth Strategy.
Diversification Opportunities for Ab Value and Growth Strategy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ABVCX and GROWTH is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Ab Value i.e., Ab Value and Growth Strategy go up and down completely randomly.
Pair Corralation between Ab Value and Growth Strategy
Assuming the 90 days horizon Ab Value Fund is expected to generate 1.44 times more return on investment than Growth Strategy. However, Ab Value is 1.44 times more volatile than Growth Strategy Fund. It trades about 0.26 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.1 per unit of risk. If you would invest 1,917 in Ab Value Fund on September 3, 2024 and sell it today you would earn a total of 159.00 from holding Ab Value Fund or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Value Fund vs. Growth Strategy Fund
Performance |
| Timeline |
| Ab Value Fund |
| Growth Strategy |
Ab Value and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Value and Growth Strategy
The main advantage of trading using opposite Ab Value and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy'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 |
| Growth Strategy vs. American Funds The | Growth Strategy vs. American Funds The | Growth Strategy vs. Income Fund Of | Growth Strategy vs. Income Fund Of |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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