Correlation Between Ab Global and Extended Market
Can any of the company-specific risk be diversified away by investing in both Ab Global and Extended Market 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 Extended Market 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 Extended Market Index, you can compare the effects of market volatilities on Ab Global and Extended Market 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 Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Extended Market.
Diversification Opportunities for Ab Global and Extended Market
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CABIX and EXTENDED is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Ab Global i.e., Ab Global and Extended Market go up and down completely randomly.
Pair Corralation between Ab Global and Extended Market
Assuming the 90 days horizon Ab Global is expected to generate 4.49 times less return on investment than Extended Market. But when comparing it to its historical volatility, Ab Global Risk is 2.61 times less risky than Extended Market. It trades about 0.12 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,217 in Extended Market Index on September 2, 2024 and sell it today you would earn a total of 302.00 from holding Extended Market Index or generate 13.62% 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. Extended Market Index
Performance |
| Timeline |
| Ab Global Risk |
| Extended Market Index |
Ab Global and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Extended Market
The main advantage of trading using opposite Ab Global and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Ab Global vs. Allianzgi Convertible Income | Ab Global vs. The Gamco Global | Ab Global vs. Harbor Vertible Securities | Ab Global vs. Advent Claymore Convertible |
| Extended Market vs. Blackrock Science Technology | Extended Market vs. Technology Ultrasector Profund | Extended Market vs. Hennessy Technology Fund | Extended Market vs. Mfs Technology Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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