Correlation Between Ab Small and International Fixed

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

Diversification Opportunities for Ab Small and International Fixed

SCYVXInternationalDiversified AwaySCYVXInternationalDiversified Away100%
0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between SCYVX and International is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and International Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Fixed 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 International Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Fixed has no effect on the direction of Ab Small i.e., Ab Small and International Fixed go up and down completely randomly.

Pair Corralation between Ab Small and International Fixed

Assuming the 90 days horizon Ab Small Cap is expected to generate 4.13 times more return on investment than International Fixed. However, Ab Small is 4.13 times more volatile than International Fixed Income. It trades about -0.01 of its potential returns per unit of risk. International Fixed Income is currently generating about -0.08 per unit of risk. If you would invest  1,516  in Ab Small Cap on September 28, 2024 and sell it today you would lose (26.00) from holding Ab Small Cap or give up 1.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ab Small Cap  vs.  International Fixed Income

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20246810
JavaScript chart by amCharts 3.21.15SCYVX TIFUX
       Timeline  
Ab Small Cap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fairly strong basic indicators, Ab Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1515.51616.5
International Fixed 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days International Fixed Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, International Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecDec6.756.86.856.9

Ab Small and International Fixed Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.19-1.64-1.09-0.54-0.010.51.051.62.152.7 0.51.01.52.02.53.03.5
JavaScript chart by amCharts 3.21.15SCYVX TIFUX
       Returns  

Pair Trading with Ab Small and International Fixed

The main advantage of trading using opposite Ab Small and International Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, International Fixed 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 International Fixed will offset losses from the drop in International Fixed's long position.
The idea behind Ab Small Cap and International Fixed Income 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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