Correlation Between Ab Pennsylvania and FLFR
Can any of the company-specific risk be diversified away by investing in both Ab Pennsylvania and FLFR 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 Pennsylvania and FLFR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Pennsylvania Portfolio and FLFR, you can compare the effects of market volatilities on Ab Pennsylvania and FLFR 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 Pennsylvania with a short position of FLFR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Pennsylvania and FLFR.
Diversification Opportunities for Ab Pennsylvania and FLFR
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between APAAX and FLFR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ab Pennsylvania Portfolio and FLFR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLFR and Ab Pennsylvania 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 Pennsylvania Portfolio are associated (or correlated) with FLFR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLFR has no effect on the direction of Ab Pennsylvania i.e., Ab Pennsylvania and FLFR go up and down completely randomly.
Pair Corralation between Ab Pennsylvania and FLFR
Assuming the 90 days horizon Ab Pennsylvania is expected to generate 6.33 times less return on investment than FLFR. But when comparing it to its historical volatility, Ab Pennsylvania Portfolio is 4.76 times less risky than FLFR. It trades about 0.06 of its potential returns per unit of risk. FLFR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,857 in FLFR on September 3, 2024 and sell it today you would earn a total of 332.00 from holding FLFR or generate 11.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.0% |
| Values | Daily Returns |
Ab Pennsylvania Portfolio vs. FLFR
Performance |
| Timeline |
| Ab Pennsylvania Portfolio |
| FLFR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ab Pennsylvania and FLFR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Pennsylvania and FLFR
The main advantage of trading using opposite Ab Pennsylvania and FLFR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Pennsylvania position performs unexpectedly, FLFR 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 FLFR will offset losses from the drop in FLFR's long position.| Ab Pennsylvania vs. T Rowe Price | Ab Pennsylvania vs. T Rowe Price | Ab Pennsylvania vs. John Hancock Funds | Ab Pennsylvania vs. T Rowe Price |
| FLFR vs. Franklin FTSE Germany | FLFR vs. Franklin FTSE United | FLFR vs. Franklin FTSE Mexico | FLFR vs. Franklin FTSE Australia |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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