Correlation Between Ab Sustainable and International Strategic

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

By analyzing existing cross correlation between Ab Sustainable Thematic and International Strategic Equities, you can compare the effects of market volatilities on Ab Sustainable and International Strategic 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 Sustainable with a short position of International Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Sustainable and International Strategic.

Diversification Opportunities for Ab Sustainable and International Strategic

0.75

Correlation Coefficient

Ab Sustainable  International Strategic

Poor diversification

The 3 months correlation between STHAX and International is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic and International Strategic Equiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Strategic and Ab Sustainable 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 Sustainable Thematic are associated (or correlated) with International Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Strategic has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and International Strategic go up and down completely randomly.

Pair Corralation between Ab Sustainable and International Strategic

Assuming the 90 days horizon Ab Sustainable Thematic is expected to generate 0.52 times more return on investment than International Strategic. However, Ab Sustainable Thematic is 1.93 times less risky than International Strategic. It trades about -0.11 of its potential returns per unit of risk. International Strategic Equities is currently generating about -0.24 per unit of risk. If you would invest  834.00  in Ab Sustainable Thematic on September 23, 2024 and sell it today you would lose (7.00) from holding Ab Sustainable Thematic or give up 0.84% of portfolio value over 90 days.

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

Ab Sustainable Thematic  vs.  International Strategic Equiti

Ab Sustainable Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

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

International Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Strategic Equities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, International Strategic 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 Sustainable and International Strategic

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

The idea behind Ab Sustainable Thematic and International Strategic Equities 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.