Correlation Between Ab Sustainable and Abr Enhanced

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

By analyzing existing cross correlation between Ab Sustainable Global and Abr Enhanced Short, you can compare the effects of market volatilities on Ab Sustainable and Abr Enhanced 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 Sustainable with a short position of Abr Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and Abr Enhanced.

Diversification Opportunities for Ab Sustainable and Abr Enhanced

-0.24

Correlation Coefficient

Ab Sustainable  Abr Enhanced

Very good diversification

The 3 months correlation between ATEYX and Abr is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Global and Abr Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abr Enhanced Short and Ab Sustainable 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 Sustainable Global are associated (or correlated) with Abr Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abr Enhanced Short has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and Abr Enhanced go up and down completely randomly.

Pair Corralation between Ab Sustainable and Abr Enhanced

Assuming the 90 days horizon Ab Sustainable Global is expected to under-perform the Abr Enhanced. In addition to that, Ab Sustainable is 1.22 times more volatile than Abr Enhanced Short. It trades about -0.28 of its total potential returns per unit of risk. Abr Enhanced Short is currently generating about -0.14 per unit of volatility. If you would invest  871.00  in Abr Enhanced Short on October 6, 2024 and sell it today you would lose (37.00) from holding Abr Enhanced Short or give up 4.25% of portfolio value over 90 days.

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

Ab Sustainable Global  vs.  Abr Enhanced Short

Ab Sustainable Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Sustainable Global 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.

Abr Enhanced Short

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abr Enhanced Short are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Abr Enhanced may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ab Sustainable and Abr Enhanced

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

The idea behind Ab Sustainable Global and Abr Enhanced Short 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.