Correlation Between SC and ABL
Can any of the company-specific risk be diversified away by investing in both SC and ABL 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 SC and ABL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SC and ABL, you can compare the effects of market volatilities on SC and ABL 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 SC with a short position of ABL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SC and ABL.
Diversification Opportunities for SC and ABL
Pay attention - limited upside
The 3 months correlation between SC and ABL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SC and ABL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL and SC 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 SC are associated (or correlated) with ABL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL has no effect on the direction of SC i.e., SC and ABL go up and down completely randomly.
Pair Corralation between SC and ABL
If you would invest (100.00) in ABL on November 8, 2024 and sell it today you would earn a total of 100.00 from holding ABL or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
SC vs. ABL
Performance |
| Timeline |
| SC |
| ABL |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SC and ABL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SC and ABL
The main advantage of trading using opposite SC and ABL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SC position performs unexpectedly, ABL 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 ABL will offset losses from the drop in ABL's long position.The idea behind SC and ABL 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.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |