Correlation Between Large-cap Growth and Abbey Capital

Can any of the company-specific risk be diversified away by investing in both Large-cap Growth and Abbey Capital 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 Large-cap Growth and Abbey Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Large Cap Growth Profund and Abbey Capital Multi, you can compare the effects of market volatilities on Large-cap Growth and Abbey Capital 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 Large-cap Growth with a short position of Abbey Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large-cap Growth and Abbey Capital.

Diversification Opportunities for Large-cap Growth and Abbey Capital

-0.01

Correlation Coefficient

Large-cap Growth  Abbey Capital

Good diversification

The 3 months correlation between LARGE-CAP and Abbey is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Abbey Capital Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbey Capital Multi and Large-cap Growth 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 Large Cap Growth Profund are associated (or correlated) with Abbey Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbey Capital Multi has no effect on the direction of Large-cap Growth i.e., Large-cap Growth and Abbey Capital go up and down completely randomly.

Pair Corralation between Large-cap Growth and Abbey Capital

Assuming the 90 days horizon Large Cap Growth Profund is expected to under-perform the Abbey Capital. In addition to that, Large-cap Growth is 1.95 times more volatile than Abbey Capital Multi. It trades about -0.02 of its total potential returns per unit of risk. Abbey Capital Multi is currently generating about -0.01 per unit of volatility. If you would invest  1,192  in Abbey Capital Multi on October 25, 2024 and sell it today you would lose (2.00) from holding Abbey Capital Multi or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Large Cap Growth Profund  vs.  Abbey Capital Multi

Large Cap Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large-cap Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Abbey Capital Multi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Abbey Capital Multi are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Abbey Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Large-cap Growth and Abbey Capital

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

The idea behind Large Cap Growth Profund and Abbey Capital Multi 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.