Correlation Between Ab Global and Locorr Hedged

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

By analyzing existing cross correlation between Ab Global Risk and Locorr Hedged Core, you can compare the effects of market volatilities on Ab Global and Locorr Hedged 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 Locorr Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Locorr Hedged.

Diversification Opportunities for Ab Global and Locorr Hedged

0.84

Correlation Coefficient

Ab Global  Locorr Hedged

Very poor diversification

The 3 months correlation between CBSYX and Locorr is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Locorr Hedged Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Hedged Core 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 Risk are associated (or correlated) with Locorr Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Hedged Core has no effect on the direction of Ab Global i.e., Ab Global and Locorr Hedged go up and down completely randomly.

Pair Corralation between Ab Global and Locorr Hedged

Assuming the 90 days horizon Ab Global Risk is expected to generate 1.15 times more return on investment than Locorr Hedged. However, Ab Global is 1.15 times more volatile than Locorr Hedged Core. It trades about 0.22 of its potential returns per unit of risk. Locorr Hedged Core is currently generating about 0.08 per unit of risk. If you would invest  1,569  in Ab Global Risk on May 12, 2025 and sell it today you would earn a total of  75.00  from holding Ab Global Risk or generate 4.78% return on investment over 90 days.

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

Ab Global Risk  vs.  Locorr Hedged Core

Ab Global Risk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global Risk are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Locorr Hedged Core

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Locorr Hedged Core are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Locorr Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Global and Locorr Hedged

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

The idea behind Ab Global Risk and Locorr Hedged Core 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.