Correlation Between Ab Small and Eventide Large
Can any of the company-specific risk be diversified away by investing in both Ab Small and Eventide Large 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 Small and Eventide Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Eventide Large Cap, you can compare the effects of market volatilities on Ab Small and Eventide Large 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 Small with a short position of Eventide Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Eventide Large.
Diversification Opportunities for Ab Small and Eventide Large
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QUAIX and Eventide is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Eventide Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Large Cap and Ab Small 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 Small Cap are associated (or correlated) with Eventide Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Large Cap has no effect on the direction of Ab Small i.e., Ab Small and Eventide Large go up and down completely randomly.
Pair Corralation between Ab Small and Eventide Large
Assuming the 90 days horizon Ab Small Cap is expected to generate 1.6 times more return on investment than Eventide Large. However, Ab Small is 1.6 times more volatile than Eventide Large Cap. It trades about -0.02 of its potential returns per unit of risk. Eventide Large Cap is currently generating about -0.1 per unit of risk. If you would invest 7,794 in Ab Small Cap on September 13, 2024 and sell it today you would lose (45.00) from holding Ab Small Cap or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Eventide Large Cap
Performance |
| Timeline |
| Ab Small Cap |
| Eventide Large Cap |
Ab Small and Eventide Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Eventide Large
The main advantage of trading using opposite Ab Small and Eventide Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Eventide Large 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 Eventide Large will offset losses from the drop in Eventide Large's long position.| Ab Small vs. Health Biotchnology Portfolio | Ab Small vs. Prudential Health Sciences | Ab Small vs. Delaware Healthcare Fund | Ab Small vs. Baillie Gifford Health |
| Eventide Large vs. Locorr Dynamic Equity | Eventide Large vs. Calamos Global Equity | Eventide Large vs. Scharf Fund Retail | Eventide Large vs. Gmo Global Equity |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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