Correlation Between Ab Global and Target
Can any of the company-specific risk be diversified away by investing in both Ab Global and Target 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 Global and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and Target, you can compare the effects of market volatilities on Ab Global and Target 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 Global with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Target.
Diversification Opportunities for Ab Global and Target
Very poor diversification
The 3 months correlation between GCECX and Target is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Ab Global 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 Global E are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Ab Global i.e., Ab Global and Target go up and down completely randomly.
Pair Corralation between Ab Global and Target
Assuming the 90 days horizon Ab Global is expected to generate 1.21 times less return on investment than Target. But when comparing it to its historical volatility, Ab Global E is 2.06 times less risky than Target. It trades about 0.05 of its potential returns per unit of risk. Target is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13,837 in Target on January 25, 2024 and sell it today you would earn a total of 2,697 from holding Target or generate 19.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global E vs. Target
Performance |
| Timeline |
| Ab Global E |
| Target |
Ab Global and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Target
The main advantage of trading using opposite Ab Global and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Ab Global vs. American Funds Capital | Ab Global vs. American Funds Capital | Ab Global vs. Capital World Growth | Ab Global vs. Capital World Growth |
| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
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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