Correlation Between Ab High and Optimum Small-mid
Can any of the company-specific risk be diversified away by investing in both Ab High and Optimum Small-mid 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 High and Optimum Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab High Income and Optimum Small Mid Cap, you can compare the effects of market volatilities on Ab High and Optimum Small-mid 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 High with a short position of Optimum Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab High and Optimum Small-mid.
Diversification Opportunities for Ab High and Optimum Small-mid
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AGDAX and Optimum is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ab High Income and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid and Ab High 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 High Income are associated (or correlated) with Optimum Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Ab High i.e., Ab High and Optimum Small-mid go up and down completely randomly.
Pair Corralation between Ab High and Optimum Small-mid
Assuming the 90 days horizon Ab High Income is expected to generate 0.12 times more return on investment than Optimum Small-mid. However, Ab High Income is 8.64 times less risky than Optimum Small-mid. It trades about -0.38 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about -0.08 per unit of risk. If you would invest 696.00 in Ab High Income on January 12, 2025 and sell it today you would lose (23.00) from holding Ab High Income or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab High Income vs. Optimum Small Mid Cap
Performance |
| Timeline |
| Ab High Income |
| Optimum Small Mid |
Ab High and Optimum Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab High and Optimum Small-mid
The main advantage of trading using opposite Ab High and Optimum Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab High position performs unexpectedly, Optimum Small-mid 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 Optimum Small-mid will offset losses from the drop in Optimum Small-mid's long position.| Ab High vs. Ab Global E | Ab High vs. Ab Global E | Ab High vs. Ab Global E | Ab High vs. Ab Minnesota Portfolio |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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