Correlation Between Ab Small and Ontrack E

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

Diversification Opportunities for Ab Small and Ontrack E

0.85

Correlation Coefficient

Ab Small  Ontrack E

Very poor diversification

The 3 months correlation between SCYVX and Ontrack is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Ontrack E Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontrack E Fund 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 Ontrack E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontrack E Fund has no effect on the direction of Ab Small i.e., Ab Small and Ontrack E go up and down completely randomly.

Pair Corralation between Ab Small and Ontrack E

Assuming the 90 days horizon Ab Small Cap is expected to under-perform the Ontrack E. In addition to that, Ab Small is 6.31 times more volatile than Ontrack E Fund. It trades about -0.22 of its total potential returns per unit of risk. Ontrack E Fund is currently generating about -0.22 per unit of volatility. If you would invest  5,230  in Ontrack E Fund on December 4, 2024 and sell it today you would lose (118.00) from holding Ontrack E Fund or give up 2.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ab Small Cap  vs.  Ontrack E Fund

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.

Ontrack E Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ontrack E Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Ontrack E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Small and Ontrack E

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

The idea behind Ab Small Cap and Ontrack E Fund 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.