Correlation Between Ab Small and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Ab Small and Regional Bank 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 Regional Bank 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 Regional Bank Fund, you can compare the effects of market volatilities on Ab Small and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Regional Bank.
Diversification Opportunities for Ab Small and Regional Bank
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SCYVX and Regional is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Ab Small i.e., Ab Small and Regional Bank go up and down completely randomly.
Pair Corralation between Ab Small and Regional Bank
Assuming the 90 days horizon Ab Small Cap is expected to generate 0.96 times more return on investment than Regional Bank. However, Ab Small Cap is 1.04 times less risky than Regional Bank. It trades about 0.06 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.05 per unit of risk. If you would invest 1,612 in Ab Small Cap on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Ab Small Cap or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Regional Bank Fund
Performance |
| Timeline |
| Ab Small Cap |
| Regional Bank |
Ab Small and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Regional Bank
The main advantage of trading using opposite Ab Small and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Ab Small vs. American Century Etf | Ab Small vs. Valic Company I | Ab Small vs. Northern Small Cap | Ab Small vs. Small Cap Value Fund |
| Regional Bank vs. Rbc Microcap Value | Regional Bank vs. Rbb Fund | Regional Bank vs. Leggmason Partners Institutional | Regional Bank vs. Arrow Managed Futures |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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