Correlation Between Ab Ohio and Ab Sustainable
Can any of the company-specific risk be diversified away by investing in both Ab Ohio and Ab Sustainable 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 Ohio and Ab Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Ohio Portfolio and Ab Sustainable Thematic, you can compare the effects of market volatilities on Ab Ohio and Ab Sustainable 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 Ohio with a short position of Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Ohio and Ab Sustainable.
Diversification Opportunities for Ab Ohio and Ab Sustainable
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AOHAX and STHYX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab Ohio Portfolio and Ab Sustainable Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Thematic and Ab Ohio 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 Ohio Portfolio are associated (or correlated) with Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Thematic has no effect on the direction of Ab Ohio i.e., Ab Ohio and Ab Sustainable go up and down completely randomly.
Pair Corralation between Ab Ohio and Ab Sustainable
Assuming the 90 days horizon Ab Ohio is expected to generate 1.3 times less return on investment than Ab Sustainable. But when comparing it to its historical volatility, Ab Ohio Portfolio is 1.6 times less risky than Ab Sustainable. It trades about 0.12 of its potential returns per unit of risk. Ab Sustainable Thematic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 801.00 in Ab Sustainable Thematic on August 24, 2024 and sell it today you would earn a total of 33.00 from holding Ab Sustainable Thematic or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Ohio Portfolio vs. Ab Sustainable Thematic
Performance |
| Timeline |
| Ab Ohio Portfolio |
| Ab Sustainable Thematic |
Ab Ohio and Ab Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Ohio and Ab Sustainable
The main advantage of trading using opposite Ab Ohio and Ab Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Ohio position performs unexpectedly, Ab Sustainable 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 Sustainable will offset losses from the drop in Ab Sustainable's long position.| Ab Ohio vs. Franklin Ohio Tax Free | Ab Ohio vs. Vanguard Ohio Long Term | Ab Ohio vs. Nuveen Ohio Municipal | Ab Ohio vs. Nuveen Ohio Municipal |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |