Correlation Between Ab Sustainable and Ab Global
Can any of the company-specific risk be diversified away by investing in both Ab Sustainable and Ab Global 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 Sustainable and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Sustainable Thematic and Ab Global Real, you can compare the effects of market volatilities on Ab Sustainable and Ab Global 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 Sustainable with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and Ab Global.
Diversification Opportunities for Ab Sustainable and Ab Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STHAX and AEEIX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic and Ab Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Real and Ab Sustainable 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 Sustainable Thematic are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Real has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and Ab Global go up and down completely randomly.
Pair Corralation between Ab Sustainable and Ab Global
Assuming the 90 days horizon Ab Sustainable is expected to generate 2.56 times less return on investment than Ab Global. But when comparing it to its historical volatility, Ab Sustainable Thematic is 2.17 times less risky than Ab Global. It trades about 0.07 of its potential returns per unit of risk. Ab Global Real is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,535 in Ab Global Real on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Ab Global Real or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Sustainable Thematic vs. Ab Global Real
Performance |
| Timeline |
| Ab Sustainable Thematic |
| Ab Global Real |
Ab Sustainable and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Sustainable and Ab Global
The main advantage of trading using opposite Ab Sustainable and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Sustainable position performs unexpectedly, Ab Global 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 Global will offset losses from the drop in Ab Global's long position.| Ab Sustainable vs. Adams Diversified Equity | Ab Sustainable vs. Tiaa Cref Smallmid Cap Equity | Ab Sustainable vs. Sentinel Small Pany | Ab Sustainable vs. Principal Lifetime Hybrid |
| Ab Global vs. Small Cap Stock | Ab Global vs. Western Asset Diversified | Ab Global vs. Sentinel Small Pany | Ab Global vs. Oppenheimer International Diversified |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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