Correlation Between Commonwealth Global and Ab Value
Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Ab Value 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 Commonwealth Global and Ab Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Global Fund and Ab Value Fund, you can compare the effects of market volatilities on Commonwealth Global and Ab Value 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 Commonwealth Global with a short position of Ab Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Ab Value.
Diversification Opportunities for Commonwealth Global and Ab Value
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and ABVCX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund and Commonwealth 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 Commonwealth Global Fund are associated (or correlated) with Ab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Ab Value go up and down completely randomly.
Pair Corralation between Commonwealth Global and Ab Value
Assuming the 90 days horizon Commonwealth Global is expected to generate 3.0 times less return on investment than Ab Value. But when comparing it to its historical volatility, Commonwealth Global Fund is 1.03 times less risky than Ab Value. It trades about 0.12 of its potential returns per unit of risk. Ab Value Fund is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,941 in Ab Value Fund on August 31, 2024 and sell it today you would earn a total of 129.00 from holding Ab Value Fund or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Global Fund vs. Ab Value Fund
Performance |
| Timeline |
| Commonwealth Global |
| Ab Value Fund |
Commonwealth Global and Ab Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Global and Ab Value
The main advantage of trading using opposite Commonwealth Global and Ab Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global position performs unexpectedly, Ab Value 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 Ab Value will offset losses from the drop in Ab Value's long position.The idea behind Commonwealth Global Fund and Ab Value Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Ab Value vs. Mesirow Financial Small | Ab Value vs. John Hancock Financial | Ab Value vs. Royce Global Financial | Ab Value vs. Goldman Sachs Financial |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |