Correlation Between Ab Value and Capital Management
Can any of the company-specific risk be diversified away by investing in both Ab Value and Capital Management 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 Value and Capital Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Value Fund and Capital Management Mid Cap, you can compare the effects of market volatilities on Ab Value and Capital Management 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 Value with a short position of Capital Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Capital Management.
Diversification Opportunities for Ab Value and Capital Management
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABVCX and Capital is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Capital Management Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Management Mid and Ab Value 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 Value Fund are associated (or correlated) with Capital Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Management Mid has no effect on the direction of Ab Value i.e., Ab Value and Capital Management go up and down completely randomly.
Pair Corralation between Ab Value and Capital Management
Assuming the 90 days horizon Ab Value Fund is expected to generate 0.59 times more return on investment than Capital Management. However, Ab Value Fund is 1.7 times less risky than Capital Management. It trades about 0.22 of its potential returns per unit of risk. Capital Management Mid Cap is currently generating about 0.05 per unit of risk. If you would invest 1,734 in Ab Value Fund on June 9, 2025 and sell it today you would earn a total of 140.00 from holding Ab Value Fund or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Value Fund vs. Capital Management Mid Cap
Performance |
| Timeline |
| Ab Value Fund |
| Capital Management Mid |
Ab Value and Capital Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Value and Capital Management
The main advantage of trading using opposite Ab Value and Capital Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, Capital Management 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 Capital Management will offset losses from the drop in Capital Management's long position.The idea behind Ab Value Fund and Capital Management Mid 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.| Capital Management vs. Calvert Developed Market | Capital Management vs. Calvert Developed Market | Capital Management vs. Calvert Short Duration | Capital Management vs. Calvert International Responsible |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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