Correlation Between Ab Global and Multi Index

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

By analyzing existing cross correlation between Ab Global Real and Multi Index 2045 Lifetime, you can compare the effects of market volatilities on Ab Global and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Multi Index.

Diversification Opportunities for Ab Global and Multi Index

-0.4

Correlation Coefficient

Ab Global  Multi Index

Very good diversification

The 3 months correlation between AEEIX and Multi is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Real and Multi Index 2045 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2045 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 Real are associated (or correlated) with Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2045 has no effect on the direction of Ab Global i.e., Ab Global and Multi Index go up and down completely randomly.

Pair Corralation between Ab Global and Multi Index

Assuming the 90 days horizon Ab Global is expected to generate 1.73 times less return on investment than Multi Index. In addition to that, Ab Global is 1.36 times more volatile than Multi Index 2045 Lifetime. It trades about 0.04 of its total potential returns per unit of risk. Multi Index 2045 Lifetime is currently generating about 0.1 per unit of volatility. If you would invest  1,076  in Multi Index 2045 Lifetime on September 13, 2024 and sell it today you would earn a total of  423.00  from holding Multi Index 2045 Lifetime or generate 39.31% return on investment over 90 days.

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

Ab Global Real  vs.  Multi Index 2045 Lifetime

Ab Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Multi Index 2045

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2045 Lifetime are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi Index 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 Global and Multi Index

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

The idea behind Ab Global Real and Multi Index 2045 Lifetime 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.