Correlation Between Valued Advisers and AB Core

Can any of the company-specific risk be diversified away by investing in both Valued Advisers and AB Core 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 Valued Advisers and AB Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Valued Advisers Trust and AB Core Plus, you can compare the effects of market volatilities on Valued Advisers and AB Core 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 Valued Advisers with a short position of AB Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valued Advisers and AB Core.

Diversification Opportunities for Valued Advisers and AB Core

-0.58

Correlation Coefficient

Valued Advisers  AB Core

Excellent diversification

The 3 months correlation between Valued and CPLS is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Valued Advisers Trust and AB Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Core Plus and Valued Advisers 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 Valued Advisers Trust are associated (or correlated) with AB Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Core Plus has no effect on the direction of Valued Advisers i.e., Valued Advisers and AB Core go up and down completely randomly.

Pair Corralation between Valued Advisers and AB Core

Given the investment horizon of 90 days Valued Advisers Trust is expected to generate 0.65 times more return on investment than AB Core. However, Valued Advisers Trust is 1.53 times less risky than AB Core. It trades about 0.07 of its potential returns per unit of risk. AB Core Plus is currently generating about -0.05 per unit of risk. If you would invest  2,528  in Valued Advisers Trust on September 4, 2024 and sell it today you would earn a total of  22.00  from holding Valued Advisers Trust or generate 0.87% return on investment over 90 days.

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

Valued Advisers Trust  vs.  AB Core Plus

Valued Advisers Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Valued Advisers Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Valued Advisers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

AB Core Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AB Core Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, AB Core is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Valued Advisers and AB Core

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

The idea behind Valued Advisers Trust and AB Core Plus 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.