Correlation Between Ab Flexfee and Global Gold

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

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

Diversification Opportunities for Ab Flexfee and Global Gold

0.48

Correlation Coefficient

Ab Flexfee  Global Gold

Very weak diversification

The 3 months correlation between FFTYX and GLOBAL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ab Flexfee Thematic and Global Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Gold Fund and Ab Flexfee 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 Flexfee Thematic are associated (or correlated) with Global Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Gold Fund has no effect on the direction of Ab Flexfee i.e., Ab Flexfee and Global Gold go up and down completely randomly.

Pair Corralation between Ab Flexfee and Global Gold

Assuming the 90 days horizon Ab Flexfee Thematic is expected to generate 0.33 times more return on investment than Global Gold. However, Ab Flexfee Thematic is 3.06 times less risky than Global Gold. It trades about 0.18 of its potential returns per unit of risk. Global Gold Fund is currently generating about -0.12 per unit of risk. If you would invest  1,997  in Ab Flexfee Thematic on September 5, 2024 and sell it today you would earn a total of  52.00  from holding Ab Flexfee Thematic or generate 2.6% return on investment over 90 days.

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

Ab Flexfee Thematic  vs.  Global Gold Fund

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.

Global Gold Fund

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Gold Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Global Gold 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 Flexfee and Global Gold

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

The idea behind Ab Flexfee Thematic and Global Gold 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.