Correlation Between Ab Discovery and First Trust
Can any of the company-specific risk be diversified away by investing in both Ab Discovery and First Trust 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 Discovery and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Discovery Value and First Trust Multi Strategy, you can compare the effects of market volatilities on Ab Discovery and First Trust 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 Discovery with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Discovery and First Trust.
Diversification Opportunities for Ab Discovery and First Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ABYSX and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ab Discovery Value and First Trust Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and Ab Discovery 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 Discovery Value are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Multi has no effect on the direction of Ab Discovery i.e., Ab Discovery and First Trust go up and down completely randomly.
Pair Corralation between Ab Discovery and First Trust
Assuming the 90 days horizon Ab Discovery Value is expected to generate 7.84 times more return on investment than First Trust. However, Ab Discovery is 7.84 times more volatile than First Trust Multi Strategy. It trades about 0.2 of its potential returns per unit of risk. First Trust Multi Strategy is currently generating about 0.34 per unit of risk. If you would invest 1,939 in Ab Discovery Value on April 30, 2025 and sell it today you would earn a total of 260.00 from holding Ab Discovery Value or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Discovery Value vs. First Trust Multi Strategy
Performance |
| Timeline |
| Ab Discovery Value |
| First Trust Multi |
Ab Discovery and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Discovery and First Trust
The main advantage of trading using opposite Ab Discovery and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Discovery position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Ab Discovery vs. Ab Discovery Growth | Ab Discovery vs. Ab International Value | Ab Discovery vs. Small Cap Core | Ab Discovery vs. Ab International Growth |
| First Trust vs. Goldman Sachs International | First Trust vs. World Precious Minerals | First Trust vs. Oppenheimer Gold Special | First Trust vs. Franklin Gold Precious |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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