Correlation Between Ab Global and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both Ab Global and Ep Emerging 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 Ep Emerging 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 Ep Emerging Markets, you can compare the effects of market volatilities on Ab Global and Ep Emerging 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 Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Ep Emerging.
Diversification Opportunities for Ab Global and Ep Emerging
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ANAGX and EPASX is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep Emerging Markets 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 Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Ab Global i.e., Ab Global and Ep Emerging go up and down completely randomly.
Pair Corralation between Ab Global and Ep Emerging
Assuming the 90 days horizon Ab Global Bond is expected to generate 0.46 times more return on investment than Ep Emerging. However, Ab Global Bond is 2.16 times less risky than Ep Emerging. It trades about 0.06 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest 683.00 in Ab Global Bond on October 28, 2024 and sell it today you would earn a total of 2.00 from holding Ab Global Bond or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Bond vs. Ep Emerging Markets
Performance |
| Timeline |
| Ab Global Bond |
| Ep Emerging Markets |
Ab Global and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Ep Emerging
The main advantage of trading using opposite Ab Global and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Ep Emerging 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 Ep Emerging will offset losses from the drop in Ep Emerging's long position.| Ab Global vs. Putnman Retirement Ready | Ab Global vs. Calvert Moderate Allocation | Ab Global vs. Blackrock Moderate Prepared | Ab Global vs. Tiaa Cref Lifestyle Moderate |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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