Correlation Between Ab Pennsylvania and Global X
Can any of the company-specific risk be diversified away by investing in both Ab Pennsylvania and Global X 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 Global X 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 Global X MSCI, you can compare the effects of market volatilities on Ab Pennsylvania and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Pennsylvania and Global X.
Diversification Opportunities for Ab Pennsylvania and Global X
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between APAAX and Global is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ab Pennsylvania Portfolio and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of Ab Pennsylvania i.e., Ab Pennsylvania and Global X go up and down completely randomly.
Pair Corralation between Ab Pennsylvania and Global X
Assuming the 90 days horizon Ab Pennsylvania is expected to generate 1.96 times less return on investment than Global X. But when comparing it to its historical volatility, Ab Pennsylvania Portfolio is 4.77 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,349 in Global X MSCI on September 2, 2024 and sell it today you would earn a total of 41.00 from holding Global X MSCI or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Pennsylvania Portfolio vs. Global X MSCI
Performance |
| Timeline |
| Ab Pennsylvania Portfolio |
| Global X MSCI |
Ab Pennsylvania and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Pennsylvania and Global X
The main advantage of trading using opposite Ab Pennsylvania and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Pennsylvania position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Ab Pennsylvania vs. Jennison Natural Resources | Ab Pennsylvania vs. Gmo Resources | Ab Pennsylvania vs. Gamco Natural Resources | Ab Pennsylvania vs. Ivy Energy Fund |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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