Correlation Between Ab Sustainable and Ab International
Can any of the company-specific risk be diversified away by investing in both Ab Sustainable 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 Sustainable 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 Sustainable Thematic and Ab International Value, you can compare the effects of market volatilities on Ab Sustainable 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 Sustainable with a short position of Ab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and Ab International.
Diversification Opportunities for Ab Sustainable and Ab International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STHYX and ABICX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic 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 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 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 Sustainable i.e., Ab Sustainable and Ab International go up and down completely randomly.
Pair Corralation between Ab Sustainable and Ab International
Assuming the 90 days horizon Ab Sustainable Thematic is expected to generate 0.24 times more return on investment than Ab International. However, Ab Sustainable Thematic is 4.15 times less risky than Ab International. It trades about 0.04 of its potential returns per unit of risk. Ab International Value is currently generating about -0.22 per unit of risk. If you would invest 837.00 in Ab Sustainable Thematic on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Ab Sustainable Thematic or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Sustainable Thematic vs. Ab International Value
Performance |
| Timeline |
| Ab Sustainable Thematic |
| Ab International Value |
Ab Sustainable and Ab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Sustainable and Ab International
The main advantage of trading using opposite Ab Sustainable and Ab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Sustainable 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 Sustainable vs. Touchstone Small Cap | Ab Sustainable vs. Small Midcap Dividend Income | Ab Sustainable vs. Ab Small Cap | Ab Sustainable vs. Qs Small Capitalization |
| Ab International vs. Aqr Large Cap | Ab International vs. Washington Mutual Investors | Ab International vs. Fundamental Large Cap | Ab International vs. Enhanced Large Pany |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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