Correlation Between Ab Small and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Ab Small and Growth Opportunities 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 Growth Opportunities 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 Growth Opportunities Fund, you can compare the effects of market volatilities on Ab Small and Growth Opportunities 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 Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Growth Opportunities.
Diversification Opportunities for Ab Small and Growth Opportunities
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QUAIX and Growth is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities 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 Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Ab Small i.e., Ab Small and Growth Opportunities go up and down completely randomly.
Pair Corralation between Ab Small and Growth Opportunities
Assuming the 90 days horizon Ab Small Cap is expected to generate 1.22 times more return on investment than Growth Opportunities. However, Ab Small is 1.22 times more volatile than Growth Opportunities Fund. It trades about 0.11 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.09 per unit of risk. If you would invest 6,563 in Ab Small Cap on September 3, 2024 and sell it today you would earn a total of 1,347 from holding Ab Small Cap or generate 20.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Growth Opportunities Fund
Performance |
| Timeline |
| Ab Small Cap |
| Growth Opportunities |
Ab Small and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Growth Opportunities
The main advantage of trading using opposite Ab Small and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Ab Small vs. Principal Lifetime Hybrid | Ab Small vs. Semiconductor Ultrasector Profund | Ab Small vs. Issachar Fund Class | Ab Small vs. Federated Mdt Large |
| Growth Opportunities vs. Victory Rs Partners | Growth Opportunities vs. Lord Abbett Small | Growth Opportunities vs. Hennessy Nerstone Mid | Growth Opportunities vs. Fpa Queens Road |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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