Correlation Between Ab Sustainable and Value Line

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

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

Diversification Opportunities for Ab Sustainable and Value Line

0.98

Correlation Coefficient

Ab Sustainable  Value Line

Almost no diversification

The 3 months correlation between STHYX and VALUE is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Ab Sustainable Thematic and Value Line E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line E and Ab Sustainable 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 Sustainable Thematic are associated (or correlated) with Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line E has no effect on the direction of Ab Sustainable i.e., Ab Sustainable and Value Line go up and down completely randomly.

Pair Corralation between Ab Sustainable and Value Line

Assuming the 90 days horizon Ab Sustainable Thematic is expected to generate 1.07 times more return on investment than Value Line. However, Ab Sustainable is 1.07 times more volatile than Value Line E. It trades about -0.01 of its potential returns per unit of risk. Value Line E is currently generating about -0.06 per unit of risk. If you would invest  848.00  in Ab Sustainable Thematic on September 3, 2024 and sell it today you would lose (2.00) from holding Ab Sustainable Thematic or give up 0.24% of portfolio value over 90 days.

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

Ab Sustainable Thematic  vs.  Value Line E

Ab Sustainable Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Value Line E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Line E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Value Line 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 Sustainable and Value Line

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

The idea behind Ab Sustainable Thematic and Value Line E 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.