Correlation Between Third Avenue and Ab Small
Can any of the company-specific risk be diversified away by investing in both Third Avenue 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 Third Avenue and Ab Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Value and Ab Small Cap, you can compare the effects of market volatilities on Third Avenue 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 Third Avenue with a short position of Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Ab Small.
Diversification Opportunities for Third Avenue and Ab Small
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Third and SCYVX is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Value 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 Third Avenue 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 Third Avenue Value 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 Third Avenue i.e., Third Avenue and Ab Small go up and down completely randomly.
Pair Corralation between Third Avenue and Ab Small
Assuming the 90 days horizon Third Avenue Value is expected to under-perform the Ab Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Third Avenue Value is 1.32 times less risky than Ab Small. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Ab Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,400 in Ab Small Cap on September 1, 2024 and sell it today you would earn a total of 240.00 from holding Ab Small Cap or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Third Avenue Value vs. Ab Small Cap
Performance |
| Timeline |
| Third Avenue Value |
| Ab Small Cap |
Third Avenue and Ab Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Ab Small
The main advantage of trading using opposite Third Avenue and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue 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.| Third Avenue vs. Third Avenue Real | Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Third Avenue Real | Third Avenue vs. Third Avenue Small |
| Ab Small vs. Ab Global E | Ab Small vs. Ab Global E | Ab Small vs. Ab Global E | Ab Small 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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