Correlation Between ETF Series and AB Low
Can any of the company-specific risk be diversified away by investing in both ETF Series and AB Low 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 ETF Series and AB Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and AB Low Volatility, you can compare the effects of market volatilities on ETF Series and AB Low 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 ETF Series with a short position of AB Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and AB Low.
Diversification Opportunities for ETF Series and AB Low
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETF and LOWV is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and AB Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Low Volatility and ETF Series 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 ETF Series Solutions are associated (or correlated) with AB Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Low Volatility has no effect on the direction of ETF Series i.e., ETF Series and AB Low go up and down completely randomly.
Pair Corralation between ETF Series and AB Low
Given the investment horizon of 90 days ETF Series is expected to generate 1.19 times less return on investment than AB Low. In addition to that, ETF Series is 1.04 times more volatile than AB Low Volatility. It trades about 0.1 of its total potential returns per unit of risk. AB Low Volatility is currently generating about 0.13 per unit of volatility. If you would invest 4,990 in AB Low Volatility on October 25, 2024 and sell it today you would earn a total of 2,250 from holding AB Low Volatility or generate 45.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 73.38% |
| Values | Daily Returns |
ETF Series Solutions vs. AB Low Volatility
Performance |
| Timeline |
| ETF Series Solutions |
| AB Low Volatility |
ETF Series and AB Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and AB Low
The main advantage of trading using opposite ETF Series and AB Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series position performs unexpectedly, AB Low 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 AB Low will offset losses from the drop in AB Low's long position.| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series vs. First Trust Exchange Traded |
| AB Low vs. AB High Dividend | AB Low vs. AB Disruptors ETF | AB Low vs. Ab Tax Aware Short | AB Low vs. AB Ultra Short |
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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