Correlation Between Ab Small and Cref Inflation-linked
Can any of the company-specific risk be diversified away by investing in both Ab Small and Cref Inflation-linked 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 Small and Cref Inflation-linked into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Cref Inflation Linked Bond, you can compare the effects of market volatilities on Ab Small and Cref Inflation-linked 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 Small with a short position of Cref Inflation-linked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Cref Inflation-linked.
Diversification Opportunities for Ab Small and Cref Inflation-linked
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QUAIX and Cref is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked and Ab Small 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 Small Cap are associated (or correlated) with Cref Inflation-linked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Ab Small i.e., Ab Small and Cref Inflation-linked go up and down completely randomly.
Pair Corralation between Ab Small and Cref Inflation-linked
Assuming the 90 days horizon Ab Small Cap is expected to generate 5.98 times more return on investment than Cref Inflation-linked. However, Ab Small is 5.98 times more volatile than Cref Inflation Linked Bond. It trades about 0.16 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.22 per unit of risk. If you would invest 6,767 in Ab Small Cap on May 30, 2025 and sell it today you would earn a total of 739.00 from holding Ab Small Cap or generate 10.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ab Small Cap vs. Cref Inflation Linked Bond
Performance |
| Timeline |
| Ab Small Cap |
| Cref Inflation Linked |
Ab Small and Cref Inflation-linked Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Cref Inflation-linked
The main advantage of trading using opposite Ab Small and Cref Inflation-linked positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Cref Inflation-linked 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 Cref Inflation-linked will offset losses from the drop in Cref Inflation-linked's long position.| Ab Small vs. Touchstone Funds Group | Ab Small vs. T Rowe Price | Ab Small vs. Old Westbury Fixed | Ab Small vs. Rbc Funds Trust |
| Cref Inflation-linked vs. Gabelli Gold Fund | Cref Inflation-linked vs. Deutsche Gold Precious | Cref Inflation-linked vs. Fidelity Advisor Gold | Cref Inflation-linked vs. Europac Gold 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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