Correlation Between Ab All and Salient Select
Can any of the company-specific risk be diversified away by investing in both Ab All and Salient 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 Salient 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 Salient Select Income, you can compare the effects of market volatilities on Ab All and Salient 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 Salient Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab All and Salient Select.
Diversification Opportunities for Ab All and Salient Select
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMTOX and Salient is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ab All Market and Salient Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Select Income 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 Salient Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Select Income has no effect on the direction of Ab All i.e., Ab All and Salient Select go up and down completely randomly.
Pair Corralation between Ab All and Salient Select
Assuming the 90 days horizon Ab All is expected to generate 2.14 times less return on investment than Salient Select. In addition to that, Ab All is 1.57 times more volatile than Salient Select Income. It trades about 0.07 of its total potential returns per unit of risk. Salient Select Income is currently generating about 0.22 per unit of volatility. If you would invest 1,748 in Salient Select Income on September 1, 2024 and sell it today you would earn a total of 215.00 from holding Salient Select Income or generate 12.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ab All Market vs. Salient Select Income
Performance |
| Timeline |
| Ab All Market |
| Salient Select Income |
Ab All and Salient Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab All and Salient Select
The main advantage of trading using opposite Ab All and Salient Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab All position performs unexpectedly, Salient 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 Salient Select will offset losses from the drop in Salient Select's long position.The idea behind Ab All Market and Salient Select Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Salient Select vs. Virtus High Yield | Salient Select vs. Alpine High Yield | Salient Select vs. Pace High Yield | Salient Select vs. Western Asset High |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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