Correlation Between Aig Government and Ab Global

Can any of the company-specific risk be diversified away by investing in both Aig Government and Ab Global 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 Aig Government and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aig Government Money and Ab Global Risk, you can compare the effects of market volatilities on Aig Government and Ab Global 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 Aig Government with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Ab Global.

Diversification Opportunities for Aig Government and Ab Global

0.27

Correlation Coefficient

Aig Government  Ab Global

Modest diversification

The 3 months correlation between Aig and CABIX is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Risk and Aig Government 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 Aig Government Money are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of Aig Government i.e., Aig Government and Ab Global go up and down completely randomly.

Pair Corralation between Aig Government and Ab Global

Assuming the 90 days horizon Aig Government Money is expected to generate 0.05 times more return on investment than Ab Global. However, Aig Government Money is 21.68 times less risky than Ab Global. It trades about 0.0 of its potential returns per unit of risk. Ab Global Risk is currently generating about -0.19 per unit of risk. If you would invest  1,009  in Aig Government Money on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Aig Government Money or generate 0.0% return on investment over 90 days.

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

Aig Government Money  vs.  Ab Global Risk

Aig Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ab Global Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Risk 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aig Government and Ab Global

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

The idea behind Aig Government Money and Ab Global Risk 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.