Correlation Between Ab New and Ab Small
Can any of the company-specific risk be diversified away by investing in both Ab New and Ab Small 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 Ab Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab New Jersey and Ab Small Cap, you can compare the effects of market volatilities on Ab New and Ab Small 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 Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab New and Ab Small.
Diversification Opportunities for Ab New and Ab Small
Very good diversification
The 3 months correlation between ANJCX and QUAZX is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ab New Jersey and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap 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 Jersey are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Ab New i.e., Ab New and Ab Small go up and down completely randomly.
Pair Corralation between Ab New and Ab Small
Assuming the 90 days horizon Ab New Jersey is expected to under-perform the Ab Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab New Jersey is 4.74 times less risky than Ab Small. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Ab Small Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,390 in Ab Small Cap on August 30, 2024 and sell it today you would earn a total of 561.00 from holding Ab Small Cap or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab New Jersey vs. Ab Small Cap
Performance |
| Timeline |
| Ab New Jersey |
| Ab Small Cap |
Ab New and Ab Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab New and Ab Small
The main advantage of trading using opposite Ab New and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab New position performs unexpectedly, Ab Small 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 Small will offset losses from the drop in Ab Small's long position.| Ab New vs. Sterling Capital Short | Ab New vs. Federated Short Intermediate Duration | Ab New vs. Kinetics Market Opportunities | Ab New vs. Angel Oak Ultrashort |
| Ab Small vs. Lord Abbett Government | Ab Small vs. Prudential Government Income | Ab Small vs. Virtus Seix Government | Ab Small vs. Franklin Adjustable Government |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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