Correlation Between Ultrasmall Cap and Ab Global

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

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

Diversification Opportunities for Ultrasmall Cap and Ab Global

0.25

Correlation Coefficient

Ultrasmall Cap  Ab Global

Modest diversification

The 3 months correlation between Ultrasmall and GCEAX is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ultrasmall Cap Profund Ultrasm and Ab Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global E and Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap 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 E has no effect on the direction of Ultrasmall Cap i.e., Ultrasmall Cap and Ab Global go up and down completely randomly.

Pair Corralation between Ultrasmall Cap and Ab Global

Assuming the 90 days horizon Ultrasmall Cap Profund Ultrasmall Cap is expected to generate 3.81 times more return on investment than Ab Global. However, Ultrasmall Cap is 3.81 times more volatile than Ab Global E. It trades about 0.12 of its potential returns per unit of risk. Ab Global E is currently generating about 0.07 per unit of risk. If you would invest  6,638  in Ultrasmall Cap Profund Ultrasmall Cap on September 13, 2024 and sell it today you would earn a total of  1,185  from holding Ultrasmall Cap Profund Ultrasmall Cap or generate 17.85% return on investment over 90 days.

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

Ultrasmall Cap Profund Ultrasm  vs.  Ab Global E

Ultrasmall Cap Profund

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrasmall Cap Profund Ultrasmall Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrasmall Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Ab Global E

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global E are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultrasmall Cap and Ab Global

The main advantage of trading using opposite Ultrasmall Cap and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap and Ab Global E 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.