Correlation Between Ab New and Stock Index
Can any of the company-specific risk be diversified away by investing in both Ab New and Stock Index 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 New and Stock Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab New York and Stock Index Fund, you can compare the effects of market volatilities on Ab New and Stock Index 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 New with a short position of Stock Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab New and Stock Index.
Diversification Opportunities for Ab New and Stock Index
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ALNVX and Stock is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ab New York and Stock Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Index Fund and Ab New 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 New York are associated (or correlated) with Stock Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Index Fund has no effect on the direction of Ab New i.e., Ab New and Stock Index go up and down completely randomly.
Pair Corralation between Ab New and Stock Index
Assuming the 90 days horizon Ab New is expected to generate 4.1 times less return on investment than Stock Index. But when comparing it to its historical volatility, Ab New York is 4.28 times less risky than Stock Index. It trades about 0.06 of its potential returns per unit of risk. Stock Index Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,110 in Stock Index Fund on October 25, 2024 and sell it today you would earn a total of 51.00 from holding Stock Index Fund or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab New York vs. Stock Index Fund
Performance |
| Timeline |
| Ab New York |
| Stock Index Fund |
Ab New and Stock Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab New and Stock Index
The main advantage of trading using opposite Ab New and Stock Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab New position performs unexpectedly, Stock Index 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 Stock Index will offset losses from the drop in Stock Index's long position.| Ab New vs. Virtus High Yield | Ab New vs. Buffalo High Yield | Ab New vs. Fidelity Capital Income | Ab New vs. Prudential High Yield |
| Stock Index vs. Vest Large Cap | Stock Index vs. Blackrock Large Cap | Stock Index vs. Avantis Large Cap | Stock Index vs. Nuveen Nwq Large Cap |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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