Correlation Between Balanced Fund and Ab Small

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

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

Diversification Opportunities for Balanced Fund and Ab Small

0.13

Correlation Coefficient

Balanced Fund  Ab Small

Average diversification

The 3 months correlation between Balanced and QUAIX is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Balanced Fund i.e., Balanced Fund and Ab Small go up and down completely randomly.

Pair Corralation between Balanced Fund and Ab Small

Assuming the 90 days horizon Balanced Fund Retail is expected to under-perform the Ab Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Balanced Fund Retail is 1.21 times less risky than Ab Small. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Ab Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,519  in Ab Small Cap on September 27, 2024 and sell it today you would earn a total of  967.00  from holding Ab Small Cap or generate 14.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Balanced Fund Retail  vs.  Ab Small Cap

Balanced Fund Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balanced Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ab Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Fund and Ab Small

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

The idea behind Balanced Fund Retail and Ab Small 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.