Correlation Between Metropolitan West and Ab Global
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Ab Global 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 Metropolitan West and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Ab Global Risk, you can compare the effects of market volatilities on Metropolitan West and Ab Global 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 Metropolitan West with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Ab Global.
Diversification Opportunities for Metropolitan West and Ab Global
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and CBSYX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Risk and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of Metropolitan West i.e., Metropolitan West and Ab Global go up and down completely randomly.
Pair Corralation between Metropolitan West and Ab Global
Assuming the 90 days horizon Metropolitan West is expected to generate 1.28 times less return on investment than Ab Global. But when comparing it to its historical volatility, Metropolitan West High is 3.24 times less risky than Ab Global. It trades about 0.18 of its potential returns per unit of risk. Ab Global Risk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,782 in Ab Global Risk on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Ab Global Risk or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Ab Global Risk
Performance |
| Timeline |
| Metropolitan West High |
| Ab Global Risk |
Metropolitan West and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Ab Global
The main advantage of trading using opposite Metropolitan West and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Ab Global 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 Global will offset losses from the drop in Ab Global's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Ab Global vs. Red Oak Technology | Ab Global vs. Mfs Technology Fund | Ab Global vs. Dreyfus Technology Growth | Ab Global vs. Biotechnology Ultrasector Profund |
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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