Correlation Between Ab Small and Ab Growth
Can any of the company-specific risk be diversified away by investing in both Ab Small and Ab Growth 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 Growth 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 Growth Fund, you can compare the effects of market volatilities on Ab Small and Ab Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Ab Growth.
Diversification Opportunities for Ab Small and Ab Growth
Very poor diversification
The 3 months correlation between SCYVX and AGRFX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Ab Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Growth Fund 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Growth Fund has no effect on the direction of Ab Small i.e., Ab Small and Ab Growth go up and down completely randomly.
Pair Corralation between Ab Small and Ab Growth
Assuming the 90 days horizon Ab Small is expected to generate 1.99 times less return on investment than Ab Growth. In addition to that, Ab Small is 1.19 times more volatile than Ab Growth Fund. It trades about 0.04 of its total potential returns per unit of risk. Ab Growth Fund is currently generating about 0.1 per unit of volatility. If you would invest 8,221 in Ab Growth Fund on September 2, 2024 and sell it today you would earn a total of 5,152 from holding Ab Growth Fund or generate 62.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Ab Growth Fund
Performance |
| Timeline |
| Ab Small Cap |
| Ab Growth Fund |
Ab Small and Ab Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Ab Growth
The main advantage of trading using opposite Ab Small and Ab Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Ab Growth 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 Growth will offset losses from the drop in Ab Growth's long position.| Ab Small vs. American Funds Conservative | Ab Small vs. Jhancock Diversified Macro | Ab Small vs. Aqr Diversified Arbitrage | Ab Small vs. Calvert Conservative Allocation |
| Ab Growth vs. Ab Sustainable Global | Ab Growth vs. Ab Relative Value | Ab Growth vs. Ab Small Cap | Ab Growth vs. Ab International Growth |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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