Correlation Between FT Vest and AB Conservative

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

By analyzing existing cross correlation between FT Vest Equity and AB Conservative Buffer, you can compare the effects of market volatilities on FT Vest and AB Conservative 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 FT Vest with a short position of AB Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and AB Conservative.

Diversification Opportunities for FT Vest and AB Conservative

0.87

Correlation Coefficient

FT Vest  AB Conservative

Very poor diversification

The 3 months correlation between DHDG and BUFC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and AB Conservative Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Conservative Buffer and FT Vest 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 FT Vest Equity are associated (or correlated) with AB Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Conservative Buffer has no effect on the direction of FT Vest i.e., FT Vest and AB Conservative go up and down completely randomly.

Pair Corralation between FT Vest and AB Conservative

Given the investment horizon of 90 days FT Vest Equity is expected to generate 0.94 times more return on investment than AB Conservative. However, FT Vest Equity is 1.06 times less risky than AB Conservative. It trades about 0.07 of its potential returns per unit of risk. AB Conservative Buffer is currently generating about 0.02 per unit of risk. If you would invest  3,056  in FT Vest Equity on March 7, 2025 and sell it today you would earn a total of  102.80  from holding FT Vest Equity or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

FT Vest Equity  vs.  AB Conservative Buffer

FT Vest Equity

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AB Conservative Buffer

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AB Conservative Buffer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, AB Conservative is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FT Vest and AB Conservative

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

The idea behind FT Vest Equity and AB Conservative Buffer 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.