Correlation Between Ab Global and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Ab Global and Lgm Risk 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 Lgm Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Real and Lgm Risk Managed, you can compare the effects of market volatilities on Ab Global and Lgm Risk 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 Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Lgm Risk.
Diversification Opportunities for Ab Global and Lgm Risk
Poor diversification
The 3 months correlation between ARECX and Lgm is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Real and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed 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 Real are associated (or correlated) with Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Ab Global i.e., Ab Global and Lgm Risk go up and down completely randomly.
Pair Corralation between Ab Global and Lgm Risk
Assuming the 90 days horizon Ab Global Real is expected to generate 2.79 times more return on investment than Lgm Risk. However, Ab Global is 2.79 times more volatile than Lgm Risk Managed. It trades about 0.13 of its potential returns per unit of risk. Lgm Risk Managed is currently generating about 0.03 per unit of risk. If you would invest 1,395 in Ab Global Real on November 30, 2024 and sell it today you would earn a total of 61.00 from holding Ab Global Real or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Real vs. Lgm Risk Managed
Performance |
| Timeline |
| Ab Global Real |
| Lgm Risk Managed |
Ab Global and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Lgm Risk
The main advantage of trading using opposite Ab Global and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.| Ab Global vs. Upright Assets Allocation | Ab Global vs. Touchstone Large Cap | Ab Global vs. Balanced Allocation Fund | Ab Global vs. Gmo Asset Allocation |
| Lgm Risk vs. Alpine Ultra Short | Lgm Risk vs. T Rowe Price | Lgm Risk vs. Catholic Responsible Investments | Lgm Risk vs. Old Westbury Short Term |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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