Correlation Between Ab Global and First Trust
Can any of the company-specific risk be diversified away by investing in both Ab Global and First Trust 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 First Trust 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 First Trust Managed, you can compare the effects of market volatilities on Ab Global and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and First Trust.
Diversification Opportunities for Ab Global and First Trust
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CABIX and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and First Trust Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Managed 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Managed has no effect on the direction of Ab Global i.e., Ab Global and First Trust go up and down completely randomly.
Pair Corralation between Ab Global and First Trust
Assuming the 90 days horizon Ab Global Risk is expected to generate 2.53 times more return on investment than First Trust. However, Ab Global is 2.53 times more volatile than First Trust Managed. It trades about 0.09 of its potential returns per unit of risk. First Trust Managed is currently generating about 0.13 per unit of risk. If you would invest 1,555 in Ab Global Risk on September 12, 2024 and sell it today you would earn a total of 254.00 from holding Ab Global Risk or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. First Trust Managed
Performance |
| Timeline |
| Ab Global Risk |
| First Trust Managed |
Ab Global and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and First Trust
The main advantage of trading using opposite Ab Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Ab Global vs. Prudential Government Income | Ab Global vs. Dreyfus Government Cash | Ab Global vs. Payden Government Fund | Ab Global vs. Sit Government Securities |
| First Trust vs. Artisan High Income | First Trust vs. Ab Global Risk | First Trust vs. Franklin High Income | First Trust vs. Ab High Income |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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