Correlation Between Ab Core and Emerging Economies
Can any of the company-specific risk be diversified away by investing in both Ab Core and Emerging Economies 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 Core and Emerging Economies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab E Opportunities and Emerging Economies Fund, you can compare the effects of market volatilities on Ab Core and Emerging Economies 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 Core with a short position of Emerging Economies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Core and Emerging Economies.
Diversification Opportunities for Ab Core and Emerging Economies
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ADGAX and Emerging is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ab E Opportunities and Emerging Economies Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Economies and Ab Core 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 E Opportunities are associated (or correlated) with Emerging Economies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Economies has no effect on the direction of Ab Core i.e., Ab Core and Emerging Economies go up and down completely randomly.
Pair Corralation between Ab Core and Emerging Economies
Assuming the 90 days horizon Ab E Opportunities is expected to generate 1.0 times more return on investment than Emerging Economies. However, Ab Core is 1.0 times more volatile than Emerging Economies Fund. It trades about 0.32 of its potential returns per unit of risk. Emerging Economies Fund is currently generating about 0.31 per unit of risk. If you would invest 2,171 in Ab E Opportunities on April 26, 2025 and sell it today you would earn a total of 352.00 from holding Ab E Opportunities or generate 16.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ab E Opportunities vs. Emerging Economies Fund
Performance |
Timeline |
Ab E Opportunities |
Emerging Economies |
Ab Core and Emerging Economies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Core and Emerging Economies
The main advantage of trading using opposite Ab Core and Emerging Economies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Core position performs unexpectedly, Emerging Economies 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 Economies will offset losses from the drop in Emerging Economies' long position.Ab Core vs. Vest Large Cap | Ab Core vs. Prudential Qma Large Cap | Ab Core vs. Tax Managed Large Cap | Ab Core vs. Guidemark Large Cap |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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