Correlation Between Ab Select and Ab Discovery
Can any of the company-specific risk be diversified away by investing in both Ab Select 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 Ab Select and Ab Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Select Longshort and Ab Discovery Value, you can compare the effects of market volatilities on Ab Select 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 Ab Select with a short position of Ab Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Ab Discovery.
Diversification Opportunities for Ab Select and Ab Discovery
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASLAX and ABCSX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Longshort and Ab Discovery Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Discovery Value and Ab Select 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 Select Longshort 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 Value has no effect on the direction of Ab Select i.e., Ab Select and Ab Discovery go up and down completely randomly.
Pair Corralation between Ab Select and Ab Discovery
Assuming the 90 days horizon Ab Select is expected to generate 1.99 times less return on investment than Ab Discovery. But when comparing it to its historical volatility, Ab Select Longshort is 3.19 times less risky than Ab Discovery. It trades about 0.27 of its potential returns per unit of risk. Ab Discovery Value is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,544 in Ab Discovery Value on June 1, 2025 and sell it today you would earn a total of 165.00 from holding Ab Discovery Value or generate 10.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Ab Select Longshort vs. Ab Discovery Value
Performance |
| Timeline |
| Ab Select Longshort |
| Ab Discovery Value |
Ab Select and Ab Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and Ab Discovery
The main advantage of trading using opposite Ab Select and Ab Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select 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.| Ab Select vs. Ab All Market | Ab Select vs. Siit Emerging Markets | Ab Select vs. Transamerica Emerging Markets | Ab Select vs. Blackrock Emerging Markets |
| Ab Discovery vs. Gabelli Global Financial | Ab Discovery vs. Davis Financial Fund | Ab Discovery vs. Mesirow Financial Small | Ab Discovery vs. Icon Financial Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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