Correlation Between Ab Select and American Funds
Can any of the company-specific risk be diversified away by investing in both Ab Select and American Funds 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 American Funds 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 American Funds Emerging, you can compare the effects of market volatilities on Ab Select and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and American Funds.
Diversification Opportunities for Ab Select and American Funds
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AUUIX and American is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and American Funds Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Emerging 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Emerging has no effect on the direction of Ab Select i.e., Ab Select and American Funds go up and down completely randomly.
Pair Corralation between Ab Select and American Funds
Assuming the 90 days horizon Ab Select Equity is expected to generate 1.88 times more return on investment than American Funds. However, Ab Select is 1.88 times more volatile than American Funds Emerging. It trades about 0.15 of its potential returns per unit of risk. American Funds Emerging is currently generating about 0.07 per unit of risk. If you would invest 1,745 in Ab Select Equity on September 3, 2024 and sell it today you would earn a total of 665.00 from holding Ab Select Equity or generate 38.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Select Equity vs. American Funds Emerging
Performance |
| Timeline |
| Ab Select Equity |
| American Funds Emerging |
Ab Select and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and American Funds
The main advantage of trading using opposite Ab Select and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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