Correlation Between Ab Sustainable and Ab Select
Can any of the company-specific risk be diversified away by investing in both Ab Sustainable and Ab Select 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 Select 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 Select Equity, you can compare the effects of market volatilities on Ab Sustainable and Ab Select 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 Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and Ab Select.
Diversification Opportunities for Ab Sustainable and Ab Select
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STHYX and AUUCX is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity 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 Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and Ab Select go up and down completely randomly.
Pair Corralation between Ab Sustainable and Ab Select
Assuming the 90 days horizon Ab Sustainable is expected to generate 3.87 times less return on investment than Ab Select. But when comparing it to its historical volatility, Ab Sustainable Thematic is 1.74 times less risky than Ab Select. It trades about 0.05 of its potential returns per unit of risk. Ab Select Equity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Ab Select Equity on September 3, 2024 and sell it today you would earn a total of 650.00 from holding Ab Select Equity or generate 43.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Sustainable Thematic vs. Ab Select Equity
Performance |
| Timeline |
| Ab Sustainable Thematic |
| Ab Select Equity |
Ab Sustainable and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Sustainable and Ab Select
The main advantage of trading using opposite Ab Sustainable and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Sustainable position performs unexpectedly, Ab Select 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 Select will offset losses from the drop in Ab Select's long position.| Ab Sustainable vs. Blackrock Sm Cap | Ab Sustainable vs. Davenport Small Cap | Ab Sustainable vs. Massmutual Premier Diversified | Ab Sustainable vs. Tax Managed Mid Small |
| Ab Select vs. Vanguard Total Stock | Ab Select vs. Vanguard 500 Index | Ab Select vs. Vanguard Total Stock | Ab Select vs. Vanguard Total Stock |
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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