Correlation Between Ab Fixed-income and Utilities Ultrasector

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

By analyzing existing cross correlation between Ab Fixed Income Shares and Utilities Ultrasector Profund, you can compare the effects of market volatilities on Ab Fixed-income and Utilities Ultrasector 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 Fixed-income with a short position of Utilities Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Fixed-income and Utilities Ultrasector.

Diversification Opportunities for Ab Fixed-income and Utilities Ultrasector

0.0

Correlation Coefficient

Ab Fixed-income  Utilities Ultrasector

Pay attention - limited upside

The 3 months correlation between AECXX and Utilities is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ab Fixed Income Shares and Utilities Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Ultrasector and Ab Fixed-income 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 Fixed Income Shares are associated (or correlated) with Utilities Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Ultrasector has no effect on the direction of Ab Fixed-income i.e., Ab Fixed-income and Utilities Ultrasector go up and down completely randomly.

Pair Corralation between Ab Fixed-income and Utilities Ultrasector

If you would invest  5,046  in Utilities Ultrasector Profund on October 7, 2024 and sell it today you would earn a total of  2,016  from holding Utilities Ultrasector Profund or generate 39.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	51.98%
Values	Daily Returns

Ab Fixed Income Shares  vs.  Utilities Ultrasector Profund

Ab Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Utilities Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utilities Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Utilities Ultrasector 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 Fixed-income and Utilities Ultrasector

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

The idea behind Ab Fixed Income Shares and Utilities Ultrasector Profund 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.