Correlation Between William Blair and Ab Small

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

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

Diversification Opportunities for William Blair and Ab Small

0.93

Correlation Coefficient

William Blair  Ab Small

Almost no diversification

The 3 months correlation between William and SCYVX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Small and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap and William Blair 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 William Blair Small are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of William Blair i.e., William Blair and Ab Small go up and down completely randomly.

Pair Corralation between William Blair and Ab Small

Assuming the 90 days horizon William Blair Small is expected to under-perform the Ab Small. In addition to that, William Blair is 1.08 times more volatile than Ab Small Cap. It trades about 0.0 of its total potential returns per unit of risk. Ab Small Cap is currently generating about 0.16 per unit of volatility. If you would invest  1,587  in Ab Small Cap on September 15, 2024 and sell it today you would earn a total of  39.00  from holding Ab Small Cap or generate 2.46% return on investment over 90 days.

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

William Blair Small  vs.  Ab Small Cap

William Blair Small

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, William Blair is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Small Cap

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with William Blair and Ab Small

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

The idea behind William Blair Small and Ab Small Cap 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.