Correlation Between Ab Global and Ab New
Can any of the company-specific risk be diversified away by investing in both Ab Global and Ab New 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 Global and Ab New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Bond and Ab New York, you can compare the effects of market volatilities on Ab Global and Ab New 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 Global with a short position of Ab New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Ab New.
Diversification Opportunities for Ab Global and Ab New
Very poor diversification
The 3 months correlation between ANAGX and ALNYX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and Ab New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab New York and Ab Global 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 Global Bond are associated (or correlated) with Ab New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab New York has no effect on the direction of Ab Global i.e., Ab Global and Ab New go up and down completely randomly.
Pair Corralation between Ab Global and Ab New
Assuming the 90 days horizon Ab Global is expected to generate 1.05 times less return on investment than Ab New. But when comparing it to its historical volatility, Ab Global Bond is 1.46 times less risky than Ab New. It trades about 0.11 of its potential returns per unit of risk. Ab New York is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 931.00 in Ab New York on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Ab New York or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Global Bond vs. Ab New York
Performance |
| Timeline |
| Ab Global Bond |
| Ab New York |
Ab Global and Ab New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Ab New
The main advantage of trading using opposite Ab Global and Ab New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Ab New 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 New will offset losses from the drop in Ab New's long position.| Ab Global vs. Virtus High Yield | Ab Global vs. Siit High Yield | Ab Global vs. Dunham High Yield | Ab Global vs. Blackrock High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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