Correlation Between Ab Small and Ab International
Can any of the company-specific risk be diversified away by investing in both Ab Small and Ab International 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 Ab International 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 Ab International Value, you can compare the effects of market volatilities on Ab Small and Ab International 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 Ab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Ab International.
Diversification Opportunities for Ab Small and Ab International
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SCCVX and ABICX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Ab International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab International Value 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 Ab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab International Value has no effect on the direction of Ab Small i.e., Ab Small and Ab International go up and down completely randomly.
Pair Corralation between Ab Small and Ab International
Assuming the 90 days horizon Ab Small Cap is expected to generate 0.9 times more return on investment than Ab International. However, Ab Small Cap is 1.11 times less risky than Ab International. It trades about 0.3 of its potential returns per unit of risk. Ab International Value is currently generating about -0.14 per unit of risk. If you would invest 1,374 in Ab Small Cap on September 1, 2024 and sell it today you would earn a total of 142.00 from holding Ab Small Cap or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Ab International Value
Performance |
| Timeline |
| Ab Small Cap |
| Ab International Value |
Ab Small and Ab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Ab International
The main advantage of trading using opposite Ab Small and Ab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Ab International 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 International will offset losses from the drop in Ab International's long position.| Ab Small vs. Ab Global E | Ab Small vs. Ab Global E | Ab Small vs. Ab Global E | Ab Small vs. Ab Minnesota Portfolio |
| Ab International vs. Ab Global E | Ab International vs. Ab Global E | Ab International vs. Ab Global E | Ab International vs. Ab Minnesota Portfolio |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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