Correlation Between Snow Capital and Ab Impact

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

By analyzing existing cross correlation between Snow Capital Opportunity and Ab Impact Municipal, you can compare the effects of market volatilities on Snow Capital and Ab Impact 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 Snow Capital with a short position of Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snow Capital and Ab Impact.

Diversification Opportunities for Snow Capital and Ab Impact

0.25

Correlation Coefficient

Snow Capital  Ab Impact

Modest diversification

The 3 months correlation between Snow and ABIMX is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Snow Capital Opportunity and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal and Snow Capital 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 Snow Capital Opportunity are associated (or correlated) with Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Snow Capital i.e., Snow Capital and Ab Impact go up and down completely randomly.

Pair Corralation between Snow Capital and Ab Impact

Assuming the 90 days horizon Snow Capital Opportunity is expected to under-perform the Ab Impact. In addition to that, Snow Capital is 3.15 times more volatile than Ab Impact Municipal. It trades about -0.52 of its total potential returns per unit of risk. Ab Impact Municipal is currently generating about -0.31 per unit of volatility. If you would invest  993.00  in Ab Impact Municipal on September 24, 2024 and sell it today you would lose (21.00) from holding Ab Impact Municipal or give up 2.11% of portfolio value over 90 days.

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

Snow Capital Opportunity  vs.  Ab Impact Municipal

Snow Capital Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snow Capital Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Snow Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Impact Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Impact Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Ab Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Snow Capital and Ab Impact

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

The idea behind Snow Capital Opportunity and Ab Impact Municipal 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.