Correlation Between Ab Global and Global Opportunity
Can any of the company-specific risk be diversified away by investing in both Ab Global and Global Opportunity 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 Global and Global Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and Global Opportunity Portfolio, you can compare the effects of market volatilities on Ab Global and Global Opportunity 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 Global with a short position of Global Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Global Opportunity.
Diversification Opportunities for Ab Global and Global Opportunity
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GCEAX and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and Global Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunity and Ab 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 Ab Global E are associated (or correlated) with Global Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunity has no effect on the direction of Ab Global i.e., Ab Global and Global Opportunity go up and down completely randomly.
Pair Corralation between Ab Global and Global Opportunity
Assuming the 90 days horizon Ab Global E is expected to generate 0.69 times more return on investment than Global Opportunity. However, Ab Global E is 1.46 times less risky than Global Opportunity. It trades about -0.16 of its potential returns per unit of risk. Global Opportunity Portfolio is currently generating about -0.12 per unit of risk. If you would invest 1,639 in Ab Global E on January 25, 2024 and sell it today you would lose (37.00) from holding Ab Global E or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Global E vs. Global Opportunity Portfolio
Performance |
| Timeline |
| Ab Global E |
| Global Opportunity |
Ab Global and Global Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Global Opportunity
The main advantage of trading using opposite Ab Global and Global Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Global Opportunity 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 Global Opportunity will offset losses from the drop in Global Opportunity's long position.| Ab Global vs. American Funds Capital | Ab Global vs. American Funds Capital | Ab Global vs. Capital World Growth | Ab Global vs. Capital World Growth |
| Global Opportunity vs. Marsico 21st Century | Global Opportunity vs. Northern Small Cap | Global Opportunity vs. Aberdeen Select International | Global Opportunity vs. HUMANA INC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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