Correlation Between Energy Fund and Ab Select
Can any of the company-specific risk be diversified away by investing in both Energy Fund and Ab Select 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 Energy Fund and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Fund Class and Ab Select Longshort, you can compare the effects of market volatilities on Energy Fund and Ab Select 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 Energy Fund with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Fund and Ab Select.
Diversification Opportunities for Energy Fund and Ab Select
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and ASCLX is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fund Class and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort and Energy Fund 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 Energy Fund Class are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Energy Fund i.e., Energy Fund and Ab Select go up and down completely randomly.
Pair Corralation between Energy Fund and Ab Select
Assuming the 90 days horizon Energy Fund Class is expected to generate 1.95 times more return on investment than Ab Select. However, Energy Fund is 1.95 times more volatile than Ab Select Longshort. It trades about 0.28 of its potential returns per unit of risk. Ab Select Longshort is currently generating about 0.17 per unit of risk. If you would invest 23,121 in Energy Fund Class on August 28, 2024 and sell it today you would earn a total of 1,586 from holding Energy Fund Class or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Energy Fund Class vs. Ab Select Longshort
Performance |
| Timeline |
| Energy Fund Class |
| Ab Select Longshort |
Energy Fund and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Fund and Ab Select
The main advantage of trading using opposite Energy Fund and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Fund position performs unexpectedly, Ab Select 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 Select will offset losses from the drop in Ab Select's long position.| Energy Fund vs. Energy Services Fund | Energy Fund vs. Basic Materials Fund | Energy Fund vs. Health Care Fund | Energy Fund vs. Precious Metals Fund |
| Ab Select vs. Qs Growth Fund | Ab Select vs. Ab Value Fund | Ab Select vs. Eic Value Fund | Ab Select vs. Small Cap Stock |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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