Correlation Between Strengthening Dollar and Ab Global
Can any of the company-specific risk be diversified away by investing in both Strengthening Dollar and Ab Global 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 Strengthening Dollar and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strengthening Dollar 2x and Ab Global Bond, you can compare the effects of market volatilities on Strengthening Dollar and Ab Global 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 Strengthening Dollar with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strengthening Dollar and Ab Global.
Diversification Opportunities for Strengthening Dollar and Ab Global
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Strengthening and ANAGX is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Strengthening Dollar 2x and Ab Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Bond and Strengthening Dollar 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 Strengthening Dollar 2x are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Bond has no effect on the direction of Strengthening Dollar i.e., Strengthening Dollar and Ab Global go up and down completely randomly.
Pair Corralation between Strengthening Dollar and Ab Global
Assuming the 90 days horizon Strengthening Dollar 2x is expected to under-perform the Ab Global. In addition to that, Strengthening Dollar is 5.31 times more volatile than Ab Global Bond. It trades about -0.11 of its total potential returns per unit of risk. Ab Global Bond is currently generating about 0.23 per unit of volatility. If you would invest 688.00 in Ab Global Bond on September 14, 2024 and sell it today you would earn a total of 6.00 from holding Ab Global Bond or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strengthening Dollar 2x vs. Ab Global Bond
Performance |
| Timeline |
| Strengthening Dollar |
| Ab Global Bond |
Strengthening Dollar and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strengthening Dollar and Ab Global
The main advantage of trading using opposite Strengthening Dollar and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strengthening Dollar position performs unexpectedly, Ab Global 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 Global will offset losses from the drop in Ab Global's long position.The idea behind Strengthening Dollar 2x and Ab Global Bond 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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