Correlation Between Ab Global and Small Cap
Can any of the company-specific risk be diversified away by investing in both Ab Global and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and Small Cap Core, you can compare the effects of market volatilities on Ab Global and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Small Cap.
Diversification Opportunities for Ab Global and Small Cap
Very weak diversification
The 3 months correlation between GCECX and Small is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 E are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Ab Global i.e., Ab Global and Small Cap go up and down completely randomly.
Pair Corralation between Ab Global and Small Cap
Assuming the 90 days horizon Ab Global is expected to generate 1.47 times less return on investment than Small Cap. But when comparing it to its historical volatility, Ab Global E is 1.76 times less risky than Small Cap. It trades about 0.07 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,189 in Small Cap Core on August 26, 2024 and sell it today you would earn a total of 272.00 from holding Small Cap Core or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global E vs. Small Cap Core
Performance |
| Timeline |
| Ab Global E |
| Small Cap Core |
Ab Global and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Small Cap
The main advantage of trading using opposite Ab Global and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Ab Global vs. Guggenheim High Yield | Ab Global vs. American Century High | Ab Global vs. Pia High Yield | Ab Global vs. Pace High Yield |
| Small Cap vs. Ab Global E | Small Cap vs. Ab Global E | Small Cap vs. Ab Global E | Small Cap vs. Ab Minnesota Portfolio |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| 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 | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |