Correlation Between Ab Global and Kensington Dynamic
Can any of the company-specific risk be diversified away by investing in both Ab Global and Kensington Dynamic 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 Kensington Dynamic 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 Kensington Dynamic Growth, you can compare the effects of market volatilities on Ab Global and Kensington Dynamic 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 Kensington Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Kensington Dynamic.
Diversification Opportunities for Ab Global and Kensington Dynamic
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CABIX and Kensington is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Kensington Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Dynamic Growth 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 Kensington Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Dynamic Growth has no effect on the direction of Ab Global i.e., Ab Global and Kensington Dynamic go up and down completely randomly.
Pair Corralation between Ab Global and Kensington Dynamic
Assuming the 90 days horizon Ab Global Risk is expected to generate 0.41 times more return on investment than Kensington Dynamic. However, Ab Global Risk is 2.42 times less risky than Kensington Dynamic. It trades about 0.48 of its potential returns per unit of risk. Kensington Dynamic Growth is currently generating about 0.18 per unit of risk. If you would invest 1,767 in Ab Global Risk on September 14, 2024 and sell it today you would earn a total of 45.00 from holding Ab Global Risk or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. Kensington Dynamic Growth
Performance |
| Timeline |
| Ab Global Risk |
| Kensington Dynamic Growth |
Ab Global and Kensington Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Kensington Dynamic
The main advantage of trading using opposite Ab Global and Kensington Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Kensington Dynamic 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 Kensington Dynamic will offset losses from the drop in Kensington Dynamic's long position.| Ab Global vs. Elfun Government Money | Ab Global vs. Franklin Government Money | Ab Global vs. Money Market Obligations | Ab Global vs. Blackrock Exchange Portfolio |
| Kensington Dynamic vs. Jhancock Global Equity | Kensington Dynamic vs. Ab Global Risk | Kensington Dynamic vs. 361 Global Longshort | Kensington Dynamic vs. Legg Mason Global |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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