Correlation Between Ab Growth and Ab Flexfee

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

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

Diversification Opportunities for Ab Growth and Ab Flexfee

0.45

Correlation Coefficient

Ab Growth  Ab Flexfee

Very weak diversification

The 3 months correlation between AGRFX and FFTYX is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ab Growth Fund and Ab Flexfee Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Flexfee Thematic and Ab Growth 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 Growth Fund are associated (or correlated) with Ab Flexfee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Flexfee Thematic has no effect on the direction of Ab Growth i.e., Ab Growth and Ab Flexfee go up and down completely randomly.

Pair Corralation between Ab Growth and Ab Flexfee

Assuming the 90 days horizon Ab Growth Fund is expected to generate 1.31 times more return on investment than Ab Flexfee. However, Ab Growth is 1.31 times more volatile than Ab Flexfee Thematic. It trades about 0.25 of its potential returns per unit of risk. Ab Flexfee Thematic is currently generating about 0.07 per unit of risk. If you would invest  11,621  in Ab Growth Fund on September 3, 2024 and sell it today you would earn a total of  1,854  from holding Ab Growth Fund or generate 15.95% return on investment over 90 days.

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

Ab Growth Fund  vs.  Ab Flexfee Thematic

Ab Growth Fund

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Growth Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ab Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Ab Flexfee Thematic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Flexfee Thematic are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Flexfee 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 Growth and Ab Flexfee

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

The idea behind Ab Growth Fund and Ab Flexfee Thematic 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.