Correlation Between Ab Centrated and Focused International

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

By analyzing existing cross correlation between Ab Centrated International and Focused International Growth, you can compare the effects of market volatilities on Ab Centrated and Focused International 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 Centrated with a short position of Focused International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Centrated and Focused International.

Diversification Opportunities for Ab Centrated and Focused International

0.99

Correlation Coefficient

Ab Centrated  Focused International

No risk reduction

The 3 months correlation between CIGYX and Focused is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Ab Centrated International and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International and Ab Centrated 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 Centrated International are associated (or correlated) with Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Ab Centrated i.e., Ab Centrated and Focused International go up and down completely randomly.

Pair Corralation between Ab Centrated and Focused International

Assuming the 90 days horizon Ab Centrated International is expected to under-perform the Focused International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Centrated International is 1.04 times less risky than Focused International. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Focused International Growth is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,696  in Focused International Growth on September 24, 2024 and sell it today you would lose (22.00) from holding Focused International Growth or give up 1.3% of portfolio value over 90 days.

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

Ab Centrated International  vs.  Focused International Growth

Ab Centrated Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Centrated International 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.

Focused International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focused International Growth 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 Centrated and Focused International

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

The idea behind Ab Centrated International and Focused International Growth 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.