Correlation Between Ab Global and Spectrum Fund

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

By analyzing existing cross correlation between Ab Global Risk and Spectrum Fund Institutional, you can compare the effects of market volatilities on Ab Global and Spectrum Fund 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 Spectrum Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Spectrum Fund.

Diversification Opportunities for Ab Global and Spectrum Fund

0.98

Correlation Coefficient

Ab Global  Spectrum Fund

Almost no diversification

The 3 months correlation between CBSYX and Spectrum is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Spectrum Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Fund Instit 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 Risk are associated (or correlated) with Spectrum Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Fund Instit has no effect on the direction of Ab Global i.e., Ab Global and Spectrum Fund go up and down completely randomly.

Pair Corralation between Ab Global and Spectrum Fund

Assuming the 90 days horizon Ab Global Risk is expected to under-perform the Spectrum Fund. In addition to that, Ab Global is 1.32 times more volatile than Spectrum Fund Institutional. It trades about -0.11 of its total potential returns per unit of risk. Spectrum Fund Institutional is currently generating about -0.11 per unit of volatility. If you would invest  1,539  in Spectrum Fund Institutional on December 2, 2024 and sell it today you would lose (138.00) from holding Spectrum Fund Institutional or give up 8.97% of portfolio value over 90 days.

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

Ab Global Risk  vs.  Spectrum Fund Institutional

Ab Global Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Global Risk 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.

Spectrum Fund Instit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spectrum Fund Institutional 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.

Pair Trading with Ab Global and Spectrum Fund

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

The idea behind Ab Global Risk and Spectrum Fund Institutional 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.