Correlation Between Absolute Convertible and Ab Discovery
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Ab Discovery 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 Absolute Convertible and Ab Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Ab Discovery Growth, you can compare the effects of market volatilities on Absolute Convertible and Ab Discovery 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 Absolute Convertible with a short position of Ab Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Ab Discovery.
Diversification Opportunities for Absolute Convertible and Ab Discovery
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Absolute and CHCCX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Ab Discovery Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Discovery Growth and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Ab Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Discovery Growth has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Ab Discovery go up and down completely randomly.
Pair Corralation between Absolute Convertible and Ab Discovery
Assuming the 90 days horizon Absolute Convertible is expected to generate 4.45 times less return on investment than Ab Discovery. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 14.13 times less risky than Ab Discovery. It trades about 0.4 of its potential returns per unit of risk. Ab Discovery Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 392.00 in Ab Discovery Growth on June 8, 2025 and sell it today you would earn a total of 30.00 from holding Ab Discovery Growth or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Ab Discovery Growth
Performance |
| Timeline |
| Absolute Convertible |
| Ab Discovery Growth |
Absolute Convertible and Ab Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Ab Discovery
The main advantage of trading using opposite Absolute Convertible and Ab Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Ab Discovery 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 Discovery will offset losses from the drop in Ab Discovery's long position.| Absolute Convertible vs. First Eagle Gold | Absolute Convertible vs. Global Gold Fund | Absolute Convertible vs. The Gold Bullion | Absolute Convertible vs. International Investors Gold |
| Ab Discovery vs. Fabwx | Ab Discovery vs. Ips Strategic Capital | Ab Discovery vs. Iaadx | Ab Discovery vs. Wmcanx |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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