Correlation Between Ab Global and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Ab Global and Financial Industries 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 Financial Industries 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 Financial Industries Fund, you can compare the effects of market volatilities on Ab Global and Financial Industries 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 Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Financial Industries.
Diversification Opportunities for Ab Global and Financial Industries
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CABIX and Financial is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries 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 Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Ab Global i.e., Ab Global and Financial Industries go up and down completely randomly.
Pair Corralation between Ab Global and Financial Industries
Assuming the 90 days horizon Ab Global Risk is expected to under-perform the Financial Industries. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Global Risk is 1.4 times less risky than Financial Industries. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Financial Industries Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,124 in Financial Industries Fund on November 27, 2024 and sell it today you would earn a total of 428.00 from holding Financial Industries Fund or generate 38.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. Financial Industries Fund
Performance |
| Timeline |
| Ab Global Risk |
| Financial Industries |
Ab Global and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Financial Industries
The main advantage of trading using opposite Ab Global and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Ab Global vs. Dunham High Yield | Ab Global vs. Artisan High Income | Ab Global vs. Voya High Yield | Ab Global vs. Pace High Yield |
| Financial Industries vs. Siit Ultra Short | Financial Industries vs. T Rowe Price | Financial Industries vs. Blackrock Global Longshort | Financial Industries vs. Touchstone 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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