Correlation Between Ab Select and Global Alpha
Can any of the company-specific risk be diversified away by investing in both Ab Select and Global Alpha 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 Select and Global Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Select Equity and The Global Alpha, you can compare the effects of market volatilities on Ab Select and Global Alpha 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 Select with a short position of Global Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Global Alpha.
Diversification Opportunities for Ab Select and Global Alpha
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AUUIX and Global is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and The Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Alpha and Ab Select 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 Select Equity are associated (or correlated) with Global Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Alpha has no effect on the direction of Ab Select i.e., Ab Select and Global Alpha go up and down completely randomly.
Pair Corralation between Ab Select and Global Alpha
Assuming the 90 days horizon Ab Select Equity is expected to generate 0.74 times more return on investment than Global Alpha. However, Ab Select Equity is 1.34 times less risky than Global Alpha. It trades about -0.27 of its potential returns per unit of risk. The Global Alpha is currently generating about -0.27 per unit of risk. If you would invest 2,401 in Ab Select Equity on October 9, 2024 and sell it today you would lose (223.00) from holding Ab Select Equity or give up 9.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Select Equity vs. The Global Alpha
Performance |
| Timeline |
| Ab Select Equity |
| Global Alpha |
Ab Select and Global Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and Global Alpha
The main advantage of trading using opposite Ab Select and Global Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select position performs unexpectedly, Global Alpha 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 Alpha will offset losses from the drop in Global Alpha's long position.| Ab Select vs. Pace International Equity | Ab Select vs. Morningstar International Equity | Ab Select vs. Guidemark E Fixed | Ab Select vs. Franklin Equity Income |
| Global Alpha vs. The International Smaller | Global Alpha vs. The International Smaller | Global Alpha vs. The International Equity | Global Alpha vs. The Eafe Pure |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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