Correlation Between Ab Select and Ab Fixed

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

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

Diversification Opportunities for Ab Select and Ab Fixed

0.0

Correlation Coefficient

Ab Select  Ab Fixed

Pay attention - limited upside

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

Pair Corralation between Ab Select and Ab Fixed

Assuming the 90 days horizon Ab Select is expected to generate 38.18 times less return on investment than Ab Fixed. But when comparing it to its historical volatility, Ab Select Equity is 56.34 times less risky than Ab Fixed. It trades about 0.13 of its potential returns per unit of risk. Ab Fixed Income Shares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  99.00  in Ab Fixed Income Shares on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Ab Fixed Income Shares or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Ab Select Equity  vs.  Ab Fixed Income Shares

Ab Select Equity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Select Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ab Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 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 Select and Ab Fixed

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

The idea behind Ab Select Equity and Ab Fixed Income Shares 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.