Correlation Between Ab Select and Global Multi
Can any of the company-specific risk be diversified away by investing in both Ab Select and Global Multi 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 Multi 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 Global Multi Strategy Fund, you can compare the effects of market volatilities on Ab Select and Global Multi 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 Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Global Multi.
Diversification Opportunities for Ab Select and Global Multi
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AUUIX and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and Global Multi Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Multi Strategy 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 Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Multi Strategy has no effect on the direction of Ab Select i.e., Ab Select and Global Multi go up and down completely randomly.
Pair Corralation between Ab Select and Global Multi
Assuming the 90 days horizon Ab Select is expected to generate 2.34 times less return on investment than Global Multi. In addition to that, Ab Select is 2.56 times more volatile than Global Multi Strategy Fund. It trades about 0.02 of its total potential returns per unit of risk. Global Multi Strategy Fund is currently generating about 0.12 per unit of volatility. If you would invest 1,132 in Global Multi Strategy Fund on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Global Multi Strategy Fund or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Select Equity vs. Global Multi Strategy Fund
Performance |
| Timeline |
| Ab Select Equity |
| Global Multi Strategy |
Ab Select and Global Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and Global Multi
The main advantage of trading using opposite Ab Select and Global Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select position performs unexpectedly, Global Multi 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 Multi will offset losses from the drop in Global Multi's long position.| Ab Select vs. Vanguard Total Stock | Ab Select vs. Vanguard 500 Index | Ab Select vs. Vanguard Total Stock | Ab Select vs. Vanguard Total Stock |
| Global Multi vs. Global Advantage Portfolio | Global Multi vs. Global Strategist Portfolio | Global Multi vs. Global Strategist Portfolio | Global Multi vs. Global Equity Fund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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