Correlation Between Investec Global and Absolute Capital
Can any of the company-specific risk be diversified away by investing in both Investec Global and Absolute Capital 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 Investec Global and Absolute Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Global Franchise and Absolute Capital Asset, you can compare the effects of market volatilities on Investec Global and Absolute Capital 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 Investec Global with a short position of Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Global and Absolute Capital.
Diversification Opportunities for Investec Global and Absolute Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investec and Absolute is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Absolute Capital Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Asset and Investec Global 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 Investec Global Franchise are associated (or correlated) with Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Asset has no effect on the direction of Investec Global i.e., Investec Global and Absolute Capital go up and down completely randomly.
Pair Corralation between Investec Global and Absolute Capital
Assuming the 90 days horizon Investec Global Franchise is expected to generate 0.86 times more return on investment than Absolute Capital. However, Investec Global Franchise is 1.17 times less risky than Absolute Capital. It trades about 0.32 of its potential returns per unit of risk. Absolute Capital Asset is currently generating about 0.23 per unit of risk. If you would invest 1,752 in Investec Global Franchise on November 2, 2024 and sell it today you would earn a total of 68.00 from holding Investec Global Franchise or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Investec Global Franchise vs. Absolute Capital Asset
Performance |
| Timeline |
| Investec Global Franchise |
| Absolute Capital Asset |
Investec Global and Absolute Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Global and Absolute Capital
The main advantage of trading using opposite Investec Global and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.| Investec Global vs. Morningstar Global Income | Investec Global vs. Franklin Mutual Global | Investec Global vs. Gamco Global Opportunity | Investec Global vs. Ab Global Real |
| Absolute Capital vs. Dws Global Macro | Absolute Capital vs. Barings Global Floating | Absolute Capital vs. Asg Global Alternatives | Absolute Capital vs. Mirova Global Green |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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