Correlation Between Ab Small and Cambiar Opportunity

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Can any of the company-specific risk be diversified away by investing in both Ab Small and Cambiar Opportunity 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 Cambiar Opportunity 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 Cambiar Opportunity Fund, you can compare the effects of market volatilities on Ab Small and Cambiar Opportunity 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 Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Cambiar Opportunity.

Diversification Opportunities for Ab Small and Cambiar Opportunity

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between QUAZX and Cambiar is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity 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 Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of Ab Small i.e., Ab Small and Cambiar Opportunity go up and down completely randomly.

Pair Corralation between Ab Small and Cambiar Opportunity

Assuming the 90 days horizon Ab Small Cap is expected to generate 1.1 times more return on investment than Cambiar Opportunity. However, Ab Small is 1.1 times more volatile than Cambiar Opportunity Fund. It trades about 0.07 of its potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.05 per unit of risk. If you would invest  5,325  in Ab Small Cap on August 30, 2024 and sell it today you would earn a total of  2,626  from holding Ab Small Cap or generate 49.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ab Small Cap  vs.  Cambiar Opportunity Fund

 Performance 
       Timeline  
Ab Small Cap 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Cambiar Opportunity 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar Opportunity Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cambiar Opportunity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Small and Cambiar Opportunity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab Small and Cambiar Opportunity

The main advantage of trading using opposite Ab Small and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Cambiar Opportunity 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 Cambiar Opportunity will offset losses from the drop in Cambiar Opportunity's long position.
The idea behind Ab Small Cap and Cambiar Opportunity Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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