Correlation Between AB Disruptors and AB High

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Can any of the company-specific risk be diversified away by investing in both AB Disruptors and AB High 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 Disruptors and AB High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Disruptors ETF and AB High Dividend, you can compare the effects of market volatilities on AB Disruptors and AB High 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 Disruptors with a short position of AB High. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Disruptors and AB High.

Diversification Opportunities for AB Disruptors and AB High

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between FWD and HIDV is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AB Disruptors ETF and AB High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB High Dividend and AB Disruptors 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 Disruptors ETF are associated (or correlated) with AB High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB High Dividend has no effect on the direction of AB Disruptors i.e., AB Disruptors and AB High go up and down completely randomly.

Pair Corralation between AB Disruptors and AB High

Considering the 90-day investment horizon AB Disruptors ETF is expected to generate 2.02 times more return on investment than AB High. However, AB Disruptors is 2.02 times more volatile than AB High Dividend. It trades about 0.04 of its potential returns per unit of risk. AB High Dividend is currently generating about 0.0 per unit of risk. If you would invest  8,167  in AB Disruptors ETF on October 9, 2024 and sell it today you would earn a total of  141.00  from holding AB Disruptors ETF or generate 1.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

AB Disruptors ETF  vs.  AB High Dividend

 Performance 
       Timeline  
AB Disruptors ETF 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AB Disruptors ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, AB Disruptors may actually be approaching a critical reversion point that can send shares even higher in February 2025.
AB High Dividend 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AB High Dividend are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, AB High is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AB Disruptors and AB High Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AB Disruptors and AB High

The main advantage of trading using opposite AB Disruptors and AB High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Disruptors position performs unexpectedly, AB High 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 High will offset losses from the drop in AB High's long position.
The idea behind AB Disruptors ETF and AB High Dividend 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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