Correlation Between AB Active and Dow Jones
Can any of the company-specific risk be diversified away by investing in both AB Active and Dow Jones 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 Active and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Active ETFs, and Dow Jones Industrial, you can compare the effects of market volatilities on AB Active and Dow Jones 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 Active with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Active and Dow Jones.
Diversification Opportunities for AB Active and Dow Jones
Almost no diversification
The 3 months correlation between LRGC and Dow is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding AB Active ETFs, and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and AB Active 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 Active ETFs, are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of AB Active i.e., AB Active and Dow Jones go up and down completely randomly.
Pair Corralation between AB Active and Dow Jones
Given the investment horizon of 90 days AB Active ETFs, is expected to generate 79.45 times more return on investment than Dow Jones. However, AB Active is 79.45 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 0.00 in AB Active ETFs, on August 29, 2024 and sell it today you would earn a total of 6,952 from holding AB Active ETFs, or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 60.81% |
| Values | Daily Returns |
AB Active ETFs, vs. Dow Jones Industrial
Performance |
| Timeline |
AB Active and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
AB Active ETFs,
Pair trading matchups for AB Active
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with AB Active and Dow Jones
The main advantage of trading using opposite AB Active and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Active position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| AB Active vs. FT Vest Equity | AB Active vs. Northern Lights | AB Active vs. Dimensional International High | AB Active vs. First Trust Exchange Traded |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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