Correlation Between Ab Bond and Lsv Servative

Can any of the company-specific risk be diversified away by investing in both Ab Bond and Lsv Servative 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 Bond and Lsv Servative into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ab Bond Inflation and Lsv Servative Value, you can compare the effects of market volatilities on Ab Bond and Lsv Servative 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 Bond with a short position of Lsv Servative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Lsv Servative.

Diversification Opportunities for Ab Bond and Lsv Servative

0.54

Correlation Coefficient

Ab Bond  Lsv Servative

Very weak diversification

The 3 months correlation between ABNOX and Lsv is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Lsv Servative Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Servative Value and Ab Bond 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 Bond Inflation are associated (or correlated) with Lsv Servative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Servative Value has no effect on the direction of Ab Bond i.e., Ab Bond and Lsv Servative go up and down completely randomly.

Pair Corralation between Ab Bond and Lsv Servative

Assuming the 90 days horizon Ab Bond Inflation is expected to generate 0.15 times more return on investment than Lsv Servative. However, Ab Bond Inflation is 6.72 times less risky than Lsv Servative. It trades about 0.02 of its potential returns per unit of risk. Lsv Servative Value is currently generating about -0.04 per unit of risk. If you would invest  1,000.00  in Ab Bond Inflation on October 10, 2024 and sell it today you would earn a total of  4.00  from holding Ab Bond Inflation or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ab Bond Inflation  vs.  Lsv Servative Value

Ab Bond Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Bond Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lsv Servative Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lsv Servative Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Ab Bond and Lsv Servative

The main advantage of trading using opposite Ab Bond and Lsv Servative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Lsv Servative 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 Lsv Servative will offset losses from the drop in Lsv Servative's long position.

The idea behind Ab Bond Inflation and Lsv Servative Value pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.