Correlation Between Ab Bond and Steward Large

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

By analyzing existing cross correlation between Ab Bond Inflation and Steward Large Cap, you can compare the effects of market volatilities on Ab Bond and Steward Large 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 Bond with a short position of Steward Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Steward Large.

Diversification Opportunities for Ab Bond and Steward Large

-0.48

Correlation Coefficient

Ab Bond  Steward Large

Very good diversification

The 3 months correlation between ANBIX and Steward is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Steward Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Large Cap and Ab Bond 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 Bond Inflation are associated (or correlated) with Steward Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Large Cap has no effect on the direction of Ab Bond i.e., Ab Bond and Steward Large go up and down completely randomly.

Pair Corralation between Ab Bond and Steward Large

Assuming the 90 days horizon Ab Bond Inflation is expected to under-perform the Steward Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Bond Inflation is 4.0 times less risky than Steward Large. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Steward Large Cap is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,936  in Steward Large Cap on September 8, 2024 and sell it today you would earn a total of  476.00  from holding Steward Large Cap or generate 16.21% return on investment over 90 days.

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

Ab Bond Inflation  vs.  Steward Large Cap

Ab Bond Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Steward Large Cap

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Large Cap are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Steward Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ab Bond and Steward Large

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

The idea behind Ab Bond Inflation and Steward Large Cap 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 Valuation module to check real value of public entities based on technical and fundamental data.