Correlation Between Ab International and Nova Fund

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

By analyzing existing cross correlation between Ab International Growth and Nova Fund Class, you can compare the effects of market volatilities on Ab International and Nova Fund 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 International with a short position of Nova Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab International and Nova Fund.

Diversification Opportunities for Ab International and Nova Fund

0.81

Correlation Coefficient

Ab International  Nova Fund

Very poor diversification

The 3 months correlation between AWPYX and Nova is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab International Growth and Nova Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Fund Class and Ab International 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 International Growth are associated (or correlated) with Nova Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Fund Class has no effect on the direction of Ab International i.e., Ab International and Nova Fund go up and down completely randomly.

Pair Corralation between Ab International and Nova Fund

Assuming the 90 days horizon Ab International is expected to generate 2.58 times less return on investment than Nova Fund. But when comparing it to its historical volatility, Ab International Growth is 1.52 times less risky than Nova Fund. It trades about 0.12 of its potential returns per unit of risk. Nova Fund Class is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,696  in Nova Fund Class on May 11, 2025 and sell it today you would earn a total of  1,562  from holding Nova Fund Class or generate 12.3% return on investment over 90 days.

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

Ab International Growth  vs.  Nova Fund Class

Ab International Growth

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ab International Growth are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nova Fund Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Fund Class are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nova Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Ab International and Nova Fund

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

The idea behind Ab International Growth and Nova Fund Class 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.