Correlation Between Absolute Cef and Absolute Capital

Can any of the company-specific risk be diversified away by investing in both Absolute Cef and Absolute Capital 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 Cef and Absolute Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absolute Cef Opportunities and Absolute Capital Opportunities, you can compare the effects of market volatilities on Absolute Cef and Absolute Capital 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 Cef with a short position of Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Cef and Absolute Capital.

Diversification Opportunities for Absolute Cef and Absolute Capital

0.59

Correlation Coefficient

Absolute Cef  Absolute Capital

Very weak diversification

The 3 months correlation between Absolute and Absolute is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Cef Opportunities and Absolute Capital Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Opp and Absolute Cef 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 Cef Opportunities are associated (or correlated) with Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Opp has no effect on the direction of Absolute Cef i.e., Absolute Cef and Absolute Capital go up and down completely randomly.

Pair Corralation between Absolute Cef and Absolute Capital

Assuming the 90 days horizon Absolute Cef Opportunities is expected to generate 0.77 times more return on investment than Absolute Capital. However, Absolute Cef Opportunities is 1.3 times less risky than Absolute Capital. It trades about 0.3 of its potential returns per unit of risk. Absolute Capital Opportunities is currently generating about 0.01 per unit of risk. If you would invest  588.00  in Absolute Cef Opportunities on May 17, 2025 and sell it today you would earn a total of  29.00  from holding Absolute Cef Opportunities or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Absolute Cef Opportunities  vs.  Absolute Capital Opportunities

Absolute Cef Opportu

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Cef Opportunities are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Absolute Cef is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absolute Capital Opp

Risk-Adjusted Performance

Weakest

Over the last 90 days Absolute Capital Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Absolute Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absolute Cef and Absolute Capital

The main advantage of trading using opposite Absolute Cef and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Cef position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.

The idea behind Absolute Cef Opportunities and Absolute Capital Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.