Correlation Between Ab Small and Federated Ohio
Can any of the company-specific risk be diversified away by investing in both Ab Small and Federated Ohio 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 Federated Ohio 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 Federated Ohio Municipal, you can compare the effects of market volatilities on Ab Small and Federated Ohio 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 Federated Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Federated Ohio.
Diversification Opportunities for Ab Small and Federated Ohio
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SCYVX and Federated is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Federated Ohio Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ohio Municipal 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 Federated Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ohio Municipal has no effect on the direction of Ab Small i.e., Ab Small and Federated Ohio go up and down completely randomly.
Pair Corralation between Ab Small and Federated Ohio
Assuming the 90 days horizon Ab Small Cap is expected to generate 6.39 times more return on investment than Federated Ohio. However, Ab Small is 6.39 times more volatile than Federated Ohio Municipal. It trades about 0.11 of its potential returns per unit of risk. Federated Ohio Municipal is currently generating about 0.06 per unit of risk. If you would invest 1,373 in Ab Small Cap on September 15, 2024 and sell it today you would earn a total of 253.00 from holding Ab Small Cap or generate 18.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Federated Ohio Municipal
Performance |
| Timeline |
| Ab Small Cap |
| Federated Ohio Municipal |
Ab Small and Federated Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Federated Ohio
The main advantage of trading using opposite Ab Small and Federated Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Federated Ohio 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 Federated Ohio will offset losses from the drop in Federated Ohio's long position.| Ab Small vs. Small Cap Core | Ab Small vs. Aquagold International | Ab Small vs. Morningstar Unconstrained Allocation | Ab Small vs. Thrivent High Yield |
| Federated Ohio vs. Federated Emerging Market | Federated Ohio vs. Federated Mdt All | Federated Ohio vs. Federated Mdt Balanced | Federated Ohio vs. Federated Global Allocation |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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