Correlation Between Ab Global and Catalyst Hedged
Can any of the company-specific risk be diversified away by investing in both Ab Global and Catalyst Hedged 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 Catalyst Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Risk and Catalyst Hedged Modity, you can compare the effects of market volatilities on Ab Global and Catalyst Hedged 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 Catalyst Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Catalyst Hedged.
Diversification Opportunities for Ab Global and Catalyst Hedged
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CABIX and Catalyst is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Catalyst Hedged Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Hedged Modity 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 Risk are associated (or correlated) with Catalyst Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Hedged Modity has no effect on the direction of Ab Global i.e., Ab Global and Catalyst Hedged go up and down completely randomly.
Pair Corralation between Ab Global and Catalyst Hedged
Assuming the 90 days horizon Ab Global Risk is expected to generate 0.55 times more return on investment than Catalyst Hedged. However, Ab Global Risk is 1.82 times less risky than Catalyst Hedged. It trades about 0.03 of its potential returns per unit of risk. Catalyst Hedged Modity is currently generating about 0.01 per unit of risk. If you would invest 1,778 in Ab Global Risk on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Ab Global Risk or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ab Global Risk vs. Catalyst Hedged Modity
Performance |
| Timeline |
| Ab Global Risk |
| Catalyst Hedged Modity |
Ab Global and Catalyst Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Catalyst Hedged
The main advantage of trading using opposite Ab Global and Catalyst Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Catalyst Hedged 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 Catalyst Hedged will offset losses from the drop in Catalyst Hedged's long position.| Ab Global vs. All Asset Fund | Ab Global vs. HUMANA INC | Ab Global vs. Aquagold International | Ab Global vs. Barloworld Ltd ADR |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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