Correlation Between Moderate Strategy and Ab Value

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

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

Diversification Opportunities for Moderate Strategy and Ab Value

0.97

Correlation Coefficient

Moderate Strategy  Ab Value

Almost no diversification

The 3 months correlation between Moderate and ABVCX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Strategy Fund and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund and Moderate Strategy 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 Moderate Strategy Fund are associated (or correlated) with Ab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of Moderate Strategy i.e., Moderate Strategy and Ab Value go up and down completely randomly.

Pair Corralation between Moderate Strategy and Ab Value

Assuming the 90 days horizon Moderate Strategy is expected to generate 1.84 times less return on investment than Ab Value. But when comparing it to its historical volatility, Moderate Strategy Fund is 1.81 times less risky than Ab Value. It trades about 0.24 of its potential returns per unit of risk. Ab Value Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,710  in Ab Value Fund on May 27, 2025 and sell it today you would earn a total of  157.00  from holding Ab Value Fund or generate 9.18% return on investment over 90 days.

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

Moderate Strategy Fund  vs.  Ab Value Fund

Moderate Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Strategy Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Moderate Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Value Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Value Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ab Value may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Moderate Strategy and Ab Value

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

The idea behind Moderate Strategy Fund and Ab Value Fund 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.