Correlation Between Ab Tax-managed and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Ab Tax-managed and Emerging Markets 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 Tax-managed and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Tax Managed Wealth and The Emerging Markets, you can compare the effects of market volatilities on Ab Tax-managed and Emerging Markets 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 Tax-managed with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Tax-managed and Emerging Markets.
Diversification Opportunities for Ab Tax-managed and Emerging Markets
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ATWCX and Emerging is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Ab Tax Managed Wealth and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Ab Tax-managed 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 Tax Managed Wealth are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Ab Tax-managed i.e., Ab Tax-managed and Emerging Markets go up and down completely randomly.
Pair Corralation between Ab Tax-managed and Emerging Markets
Assuming the 90 days horizon Ab Tax Managed Wealth is expected to generate 1.06 times more return on investment than Emerging Markets. However, Ab Tax-managed is 1.06 times more volatile than The Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.07 per unit of risk. If you would invest 1,753 in Ab Tax Managed Wealth on June 4, 2025 and sell it today you would earn a total of 748.00 from holding Ab Tax Managed Wealth or generate 42.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Tax Managed Wealth vs. The Emerging Markets
Performance |
| Timeline |
| Ab Tax Managed |
| Emerging Markets |
Ab Tax-managed and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Tax-managed and Emerging Markets
The main advantage of trading using opposite Ab Tax-managed and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Tax-managed position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Ab Tax-managed vs. Global Resources Fund | Ab Tax-managed vs. Oil Gas Ultrasector | Ab Tax-managed vs. Firsthand Alternative Energy | Ab Tax-managed vs. Gmo Resources |
| Emerging Markets vs. Highland Longshort Healthcare | Emerging Markets vs. Eventide Healthcare Life | Emerging Markets vs. Baron Health Care | Emerging Markets vs. Putnam Global Health |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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