Correlation Between Ab Global and Rbc Bluebay

Can any of the company-specific risk be diversified away by investing in both Ab Global and Rbc Bluebay 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 Rbc Bluebay 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 Rbc Bluebay Emerging, you can compare the effects of market volatilities on Ab Global and Rbc Bluebay 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 Rbc Bluebay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Rbc Bluebay.

Diversification Opportunities for Ab Global and Rbc Bluebay

0.82

Correlation Coefficient

Ab Global  Rbc Bluebay

Very poor diversification

The 3 months correlation between AEEIX and Rbc is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Real and Rbc Bluebay Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Bluebay Emerging 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 Rbc Bluebay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Bluebay Emerging has no effect on the direction of Ab Global i.e., Ab Global and Rbc Bluebay go up and down completely randomly.

Pair Corralation between Ab Global and Rbc Bluebay

Assuming the 90 days horizon Ab Global Real is expected to under-perform the Rbc Bluebay. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Global Real is 1.22 times less risky than Rbc Bluebay. The mutual fund trades about -0.42 of its potential returns per unit of risk. The Rbc Bluebay Emerging is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  1,274  in Rbc Bluebay Emerging on September 28, 2024 and sell it today you would lose (65.00) from holding Rbc Bluebay Emerging or give up 5.1% of portfolio value over 90 days.

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

Ab Global Real  vs.  Rbc Bluebay Emerging

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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Rbc Bluebay Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Bluebay Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ab Global and Rbc Bluebay

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

The idea behind Ab Global Real and Rbc Bluebay Emerging 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.