Correlation Between Ab Sustainable and Ab Small
Can any of the company-specific risk be diversified away by investing in both Ab Sustainable and Ab Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Ab Sustainable and Ab Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and Ab Small.
Diversification Opportunities for Ab Sustainable and Ab Small
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STHYX and QUACX is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and Ab Small go up and down completely randomly.
Pair Corralation between Ab Sustainable and Ab Small
Assuming the 90 days horizon Ab Sustainable is expected to generate 10.9 times less return on investment than Ab Small. But when comparing it to its historical volatility, Ab Sustainable Thematic is 3.57 times less risky than Ab Small. It trades about 0.09 of its potential returns per unit of risk. Ab Small Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,742 in Ab Small Cap on September 1, 2024 and sell it today you would earn a total of 271.00 from holding Ab Small Cap or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Sustainable Thematic vs. Ab Small Cap
Performance |
| Timeline |
| Ab Sustainable Thematic |
| Ab Small Cap |
Ab Sustainable and Ab Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Sustainable and Ab Small
The main advantage of trading using opposite Ab Sustainable and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Sustainable position performs unexpectedly, Ab Small 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 Small will offset losses from the drop in Ab Small's long position.| Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Minnesota Portfolio |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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