Correlation Between Centre Global and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Centre Global and Ab Impact 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 Centre Global and Ab Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centre Global Infrastructure and Ab Impact Municipal, you can compare the effects of market volatilities on Centre Global and Ab Impact 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 Centre Global with a short position of Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centre Global and Ab Impact.
Diversification Opportunities for Centre Global and Ab Impact
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centre and ABIMX is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Centre Global Infrastructure and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal and Centre 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 Centre Global Infrastructure are associated (or correlated) with Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Centre Global i.e., Centre Global and Ab Impact go up and down completely randomly.
Pair Corralation between Centre Global and Ab Impact
Assuming the 90 days horizon Centre Global Infrastructure is expected to generate 2.04 times more return on investment than Ab Impact. However, Centre Global is 2.04 times more volatile than Ab Impact Municipal. It trades about 0.36 of its potential returns per unit of risk. Ab Impact Municipal is currently generating about 0.02 per unit of risk. If you would invest 1,170 in Centre Global Infrastructure on October 22, 2024 and sell it today you would earn a total of 44.00 from holding Centre Global Infrastructure or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centre Global Infrastructure vs. Ab Impact Municipal
Performance |
| Timeline |
| Centre Global Infras |
| Ab Impact Municipal |
Centre Global and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centre Global and Ab Impact
The main advantage of trading using opposite Centre Global and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centre Global position performs unexpectedly, Ab Impact 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 Impact will offset losses from the drop in Ab Impact's long position.The idea behind Centre Global Infrastructure and Ab Impact Municipal 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 Impact vs. Aqr Managed Futures | Ab Impact vs. Ab Bond Inflation | Ab Impact vs. Asg Managed Futures | Ab Impact vs. T Rowe Price |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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