Correlation Between Ab Core and Defensive Market
Can any of the company-specific risk be diversified away by investing in both Ab Core and Defensive Market 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 Core and Defensive Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab E Opportunities and Defensive Market Strategies, you can compare the effects of market volatilities on Ab Core and Defensive Market 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 Core with a short position of Defensive Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Core and Defensive Market.
Diversification Opportunities for Ab Core and Defensive Market
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ADGAX and Defensive is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ab E Opportunities and Defensive Market Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defensive Market Str and Ab Core 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 E Opportunities are associated (or correlated) with Defensive Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defensive Market Str has no effect on the direction of Ab Core i.e., Ab Core and Defensive Market go up and down completely randomly.
Pair Corralation between Ab Core and Defensive Market
Assuming the 90 days horizon Ab E Opportunities is expected to generate 1.96 times more return on investment than Defensive Market. However, Ab Core is 1.96 times more volatile than Defensive Market Strategies. It trades about 0.31 of its potential returns per unit of risk. Defensive Market Strategies is currently generating about 0.33 per unit of risk. If you would invest 2,173 in Ab E Opportunities on April 25, 2025 and sell it today you would earn a total of 329.00 from holding Ab E Opportunities or generate 15.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab E Opportunities vs. Defensive Market Strategies
Performance |
| Timeline |
| Ab E Opportunities |
| Defensive Market Str |
Ab Core and Defensive Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Core and Defensive Market
The main advantage of trading using opposite Ab Core and Defensive Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Core position performs unexpectedly, Defensive Market 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 Defensive Market will offset losses from the drop in Defensive Market's long position.| Ab Core vs. Ep Emerging Markets | Ab Core vs. Aqr Tm Emerging | Ab Core vs. The Emerging Markets | Ab Core vs. Pace International Emerging |
| Defensive Market vs. Guidemark Smallmid Cap | Defensive Market vs. Lebenthal Lisanti Small | Defensive Market vs. Glg Intl Small | Defensive Market vs. Ab Small Cap |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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