Correlation Between Disciplined Growth and Ab Centrated

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

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

Diversification Opportunities for Disciplined Growth and Ab Centrated

-0.37

Correlation Coefficient

Disciplined Growth  Ab Centrated

Very good diversification

The 3 months correlation between Disciplined and WPSKX is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Disciplined Growth Fund and Ab Centrated Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Centrated Growth and Disciplined Growth 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 Disciplined Growth Fund are associated (or correlated) with Ab Centrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Centrated Growth has no effect on the direction of Disciplined Growth i.e., Disciplined Growth and Ab Centrated go up and down completely randomly.

Pair Corralation between Disciplined Growth and Ab Centrated

Assuming the 90 days horizon Disciplined Growth is expected to generate 1.11 times less return on investment than Ab Centrated. In addition to that, Disciplined Growth is 2.31 times more volatile than Ab Centrated Growth. It trades about 0.03 of its total potential returns per unit of risk. Ab Centrated Growth is currently generating about 0.07 per unit of volatility. If you would invest  4,465  in Ab Centrated Growth on October 9, 2024 and sell it today you would earn a total of  989.00  from holding Ab Centrated Growth or generate 22.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.51%
Values	Daily Returns

Disciplined Growth Fund  vs.  Ab Centrated Growth

Disciplined Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Disciplined Growth Fund 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 fundamental 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.

Ab Centrated Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Disciplined Growth and Ab Centrated

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

The idea behind Disciplined Growth Fund and Ab Centrated Growth 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.