Correlation Between Ab Small and Balanced Fund

Can any of the company-specific risk be diversified away by investing in both Ab Small and Balanced Fund 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 Balanced Fund 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 Balanced Fund Institutional, you can compare the effects of market volatilities on Ab Small and Balanced Fund 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 Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Balanced Fund.

Diversification Opportunities for Ab Small and Balanced Fund

0.89

Correlation Coefficient

Ab Small  Balanced Fund

Very poor diversification

The 3 months correlation between SCYVX and BALANCED is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Balanced Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Instit 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 Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Instit has no effect on the direction of Ab Small i.e., Ab Small and Balanced Fund go up and down completely randomly.

Pair Corralation between Ab Small and Balanced Fund

Assuming the 90 days horizon Ab Small Cap is expected to generate 1.33 times more return on investment than Balanced Fund. However, Ab Small is 1.33 times more volatile than Balanced Fund Institutional. It trades about 0.02 of its potential returns per unit of risk. Balanced Fund Institutional is currently generating about -0.01 per unit of risk. If you would invest  1,362  in Ab Small Cap on December 4, 2024 and sell it today you would earn a total of  40.00  from holding Ab Small Cap or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.59%
Values	Daily Returns

Ab Small Cap  vs.  Balanced Fund Institutional

Ab Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Balanced Fund Instit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Balanced Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Ab Small and Balanced Fund

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

The idea behind Ab Small Cap and Balanced Fund Institutional 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 Global Correlations module to find global opportunities by holding instruments from different markets.