Correlation Between Ab Sustainable and Ab New
Can any of the company-specific risk be diversified away by investing in both Ab Sustainable and Ab New 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 New 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 New Jersey, you can compare the effects of market volatilities on Ab Sustainable and Ab New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and Ab New.
Diversification Opportunities for Ab Sustainable and Ab New
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STHYX and ANJAX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic and Ab New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab New Jersey 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab New Jersey has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and Ab New go up and down completely randomly.
Pair Corralation between Ab Sustainable and Ab New
Assuming the 90 days horizon Ab Sustainable Thematic is expected to under-perform the Ab New. In addition to that, Ab Sustainable is 1.28 times more volatile than Ab New Jersey. It trades about -0.06 of its total potential returns per unit of risk. Ab New Jersey is currently generating about 0.18 per unit of volatility. If you would invest 907.00 in Ab New Jersey on August 24, 2024 and sell it today you would earn a total of 10.00 from holding Ab New Jersey or generate 1.1% 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 New Jersey
Performance |
| Timeline |
| Ab Sustainable Thematic |
| Ab New Jersey |
Ab Sustainable and Ab New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Sustainable and Ab New
The main advantage of trading using opposite Ab Sustainable and Ab New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Sustainable position performs unexpectedly, Ab New 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 New will offset losses from the drop in Ab New's long position.The idea behind Ab Sustainable Thematic and Ab New Jersey pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Ab New vs. Fidelity Government Money | Ab New vs. John Hancock Government | Ab New vs. Dws Government Money | Ab New vs. Franklin Adjustable Government |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |