Correlation Between Ab Value and Simt Real

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

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

Diversification Opportunities for Ab Value and Simt Real

-0.19

Correlation Coefficient

Ab Value  Simt Real

Good diversification

The 3 months correlation between ABVCX and Simt is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Simt Real Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Real Return and Ab Value 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 Value Fund are associated (or correlated) with Simt Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Real Return has no effect on the direction of Ab Value i.e., Ab Value and Simt Real go up and down completely randomly.

Pair Corralation between Ab Value and Simt Real

Assuming the 90 days horizon Ab Value Fund is expected to generate 5.01 times more return on investment than Simt Real. However, Ab Value is 5.01 times more volatile than Simt Real Return. It trades about 0.12 of its potential returns per unit of risk. Simt Real Return is currently generating about 0.14 per unit of risk. If you would invest  1,653  in Ab Value Fund on September 12, 2024 and sell it today you would earn a total of  368.00  from holding Ab Value Fund or generate 22.26% return on investment over 90 days.

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

Ab Value Fund  vs.  Simt Real Return

Ab Value Fund

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Value Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ab Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simt Real Return

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Real Return are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Value and Simt Real

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

The idea behind Ab Value Fund and Simt Real Return 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.