Correlation Between Ab Small and Wellington Shields

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

Diversification Opportunities for Ab Small and Wellington Shields

0.94

Correlation Coefficient

Ab Small  Wellington Shields

Almost no diversification

The 3 months correlation between SCYVX and Wellington is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Wellington Shields All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wellington Shields All 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 Wellington Shields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wellington Shields All has no effect on the direction of Ab Small i.e., Ab Small and Wellington Shields go up and down completely randomly.

Pair Corralation between Ab Small and Wellington Shields

Assuming the 90 days horizon Ab Small is expected to generate 1.03 times less return on investment than Wellington Shields. In addition to that, Ab Small is 1.56 times more volatile than Wellington Shields All Cap. It trades about 0.14 of its total potential returns per unit of risk. Wellington Shields All Cap is currently generating about 0.22 per unit of volatility. If you would invest  2,706  in Wellington Shields All Cap on September 14, 2024 and sell it today you would earn a total of  309.00  from holding Wellington Shields All Cap or generate 11.42% return on investment over 90 days.

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

Ab Small Cap  vs.  Wellington Shields All Cap

Ab Small Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wellington Shields All

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wellington Shields All Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Wellington Shields may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ab Small and Wellington Shields

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

The idea behind Ab Small Cap and Wellington Shields All Cap 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 Stocks Directory module to find actively traded stocks across global markets.