Correlation Between Ab All and Ab Select
Can any of the company-specific risk be diversified away by investing in both Ab All and Ab Select 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 All and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab All Market and Ab Select Equity, you can compare the effects of market volatilities on Ab All and Ab Select 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 All with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab All and Ab Select.
Diversification Opportunities for Ab All and Ab Select
Poor diversification
The 3 months correlation between AMTOX and AUUYX is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ab All Market and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity and Ab All 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 All Market are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Ab All i.e., Ab All and Ab Select go up and down completely randomly.
Pair Corralation between Ab All and Ab Select
Assuming the 90 days horizon Ab All is expected to generate 1.58 times less return on investment than Ab Select. But when comparing it to its historical volatility, Ab All Market is 1.38 times less risky than Ab Select. It trades about 0.04 of its potential returns per unit of risk. Ab Select Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,106 in Ab Select Equity on October 25, 2024 and sell it today you would earn a total of 170.00 from holding Ab Select Equity or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab All Market vs. Ab Select Equity
Performance |
| Timeline |
| Ab All Market |
| Ab Select Equity |
Ab All and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab All and Ab Select
The main advantage of trading using opposite Ab All and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab All position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| Ab All vs. Alphacentric Hedged Market | Ab All vs. Ashmore Emerging Markets | Ab All vs. Fidelity New Markets | Ab All vs. Artisan Developing World |
| Ab Select vs. Prudential Government Money | Ab Select vs. Putnam Money Market | Ab Select vs. Hewitt Money Market | Ab Select vs. Voya Government Money |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |