Correlation Between IShares Core and AB Active
Can any of the company-specific risk be diversified away by investing in both IShares Core and AB Active 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 IShares Core and AB Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core 1 5 and AB Active ETFs,, you can compare the effects of market volatilities on IShares Core and AB Active 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 IShares Core with a short position of AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and AB Active.
Diversification Opportunities for IShares Core and AB Active
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SDFI is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core 1 5 and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, and IShares Core 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 iShares Core 1 5 are associated (or correlated) with AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of IShares Core i.e., IShares Core and AB Active go up and down completely randomly.
Pair Corralation between IShares Core and AB Active
Given the investment horizon of 90 days IShares Core is expected to generate 1.83 times less return on investment than AB Active. But when comparing it to its historical volatility, iShares Core 1 5 is 1.8 times less risky than AB Active. It trades about 0.11 of its potential returns per unit of risk. AB Active ETFs, is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,535 in AB Active ETFs, on September 1, 2024 and sell it today you would earn a total of 24.00 from holding AB Active ETFs, or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Core 1 5 vs. AB Active ETFs,
Performance |
| Timeline |
| iShares Core 1 |
| AB Active ETFs, |
IShares Core and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and AB Active
The main advantage of trading using opposite IShares Core and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, AB Active 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 Active will offset losses from the drop in AB Active's long position.| IShares Core vs. Vanguard Intermediate Term Corporate | IShares Core vs. Vanguard Short Term Bond | IShares Core vs. Vanguard Long Term Corporate | IShares Core vs. Vanguard Short Term Treasury |
| AB Active vs. Valued Advisers Trust | AB Active vs. Columbia Diversified Fixed | AB Active vs. Principal Exchange Traded Funds | AB Active vs. Doubleline Etf Trust |
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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