Correlation Between Small-cap Value and Ab Discovery
Can any of the company-specific risk be diversified away by investing in both Small-cap Value and Ab Discovery 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 Small-cap Value and Ab Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Series and Ab Discovery Value, you can compare the effects of market volatilities on Small-cap Value and Ab Discovery 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 Small-cap Value with a short position of Ab Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Ab Discovery.
Diversification Opportunities for Small-cap Value and Ab Discovery
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small-cap and ABYSX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Series and Ab Discovery Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Discovery Value and Small-cap Value 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 Small Cap Value Series are associated (or correlated) with Ab Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Discovery Value has no effect on the direction of Small-cap Value i.e., Small-cap Value and Ab Discovery go up and down completely randomly.
Pair Corralation between Small-cap Value and Ab Discovery
Assuming the 90 days horizon Small Cap Value Series is expected to under-perform the Ab Discovery. In addition to that, Small-cap Value is 1.2 times more volatile than Ab Discovery Value. It trades about -0.24 of its total potential returns per unit of risk. Ab Discovery Value is currently generating about -0.2 per unit of volatility. If you would invest 2,232 in Ab Discovery Value on November 29, 2024 and sell it today you would lose (81.00) from holding Ab Discovery Value or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Series vs. Ab Discovery Value
Performance |
| Timeline |
| Small Cap Value |
| Ab Discovery Value |
Small-cap Value and Ab Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Ab Discovery
The main advantage of trading using opposite Small-cap Value and Ab Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value position performs unexpectedly, Ab Discovery 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 Discovery will offset losses from the drop in Ab Discovery's long position.| Small-cap Value vs. John Hancock Government | Small-cap Value vs. Vanguard Intermediate Term Government | Small-cap Value vs. Franklin Adjustable Government | Small-cap Value vs. Inverse Government Long |
| Ab Discovery vs. Ab Discovery Growth | Ab Discovery vs. Ab International Value | Ab Discovery vs. Small Cap Core | Ab Discovery vs. Ab International Growth |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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