Correlation Between Growth Strategy and Ab Sustainable
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Ab Sustainable 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 Growth Strategy and Ab Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Strategy Fund and Ab Sustainable Thematic, you can compare the effects of market volatilities on Growth Strategy and Ab Sustainable 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 Growth Strategy with a short position of Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Ab Sustainable.
Diversification Opportunities for Growth Strategy and Ab Sustainable
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GROWTH and SUTZX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Ab Sustainable Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Thematic and Growth Strategy 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 Growth Strategy Fund are associated (or correlated) with Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Thematic has no effect on the direction of Growth Strategy i.e., Growth Strategy and Ab Sustainable go up and down completely randomly.
Pair Corralation between Growth Strategy and Ab Sustainable
Assuming the 90 days horizon Growth Strategy Fund is expected to generate 0.72 times more return on investment than Ab Sustainable. However, Growth Strategy Fund is 1.38 times less risky than Ab Sustainable. It trades about 0.33 of its potential returns per unit of risk. Ab Sustainable Thematic is currently generating about 0.21 per unit of risk. If you would invest 1,299 in Growth Strategy Fund on September 2, 2024 and sell it today you would earn a total of 45.00 from holding Growth Strategy Fund or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. Ab Sustainable Thematic
Performance |
| Timeline |
| Growth Strategy |
| Ab Sustainable Thematic |
Growth Strategy and Ab Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Ab Sustainable
The main advantage of trading using opposite Growth Strategy and Ab Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Ab Sustainable 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 Sustainable will offset losses from the drop in Ab Sustainable's long position.| Growth Strategy vs. International Developed Markets | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate |
| Ab Sustainable vs. Shelton Emerging Markets | Ab Sustainable vs. Growth Strategy Fund | Ab Sustainable vs. Doubleline Emerging Markets | Ab Sustainable vs. Ashmore Emerging Markets |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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