Correlation Between Ab Small and Elfun International
Can any of the company-specific risk be diversified away by investing in both Ab Small and Elfun 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 Small and Elfun International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Elfun International Equity, you can compare the effects of market volatilities on Ab Small and Elfun 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 Small with a short position of Elfun International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Elfun International.
Diversification Opportunities for Ab Small and Elfun International
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between QUAIX and Elfun is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Elfun International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun International and Ab Small 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 Small Cap are associated (or correlated) with Elfun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun International has no effect on the direction of Ab Small i.e., Ab Small and Elfun International go up and down completely randomly.
Pair Corralation between Ab Small and Elfun International
Assuming the 90 days horizon Ab Small Cap is expected to under-perform the Elfun International. In addition to that, Ab Small is 1.92 times more volatile than Elfun International Equity. It trades about -0.12 of its total potential returns per unit of risk. Elfun International Equity is currently generating about 0.15 per unit of volatility. If you would invest 2,417 in Elfun International Equity on December 27, 2024 and sell it today you would earn a total of 191.00 from holding Elfun International Equity or generate 7.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ab Small Cap vs. Elfun International Equity
Performance |
Timeline |
Ab Small Cap |
Elfun International |
Ab Small and Elfun International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Small and Elfun International
The main advantage of trading using opposite Ab Small and Elfun International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Elfun 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 Elfun International will offset losses from the drop in Elfun International's long position.Ab Small vs. Morningstar Municipal Bond | Ab Small vs. Intermediate Term Tax Free Bond | Ab Small vs. Short Term Government Fund | Ab Small vs. Baird Quality Intermediate |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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