Correlation Between Dimensional International and AB Conservative

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

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

Diversification Opportunities for Dimensional International and AB Conservative

0.49

Correlation Coefficient

Dimensional International  AB Conservative

Very weak diversification

The 3 months correlation between Dimensional and BUFC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High 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 Dimensional International 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 Dimensional International High 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 Dimensional International i.e., Dimensional International and AB Conservative go up and down completely randomly.

Pair Corralation between Dimensional International and AB Conservative

Given the investment horizon of 90 days Dimensional International is expected to generate 68.77 times less return on investment than AB Conservative. But when comparing it to its historical volatility, Dimensional International High is 57.61 times less risky than AB Conservative. It trades about 0.04 of its potential returns per unit of risk. AB Conservative Buffer is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in AB Conservative Buffer on February 10, 2025 and sell it today you would earn a total of  3,891  from holding AB Conservative Buffer or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.52%
Values	Daily Returns

Dimensional International High  vs.  AB Conservative Buffer

Dimensional International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional International High are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Dimensional International is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

AB Conservative Buffer

Risk-Adjusted Performance

Very Weak

Over the last 90 days AB Conservative Buffer has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Dimensional International and AB Conservative

The main advantage of trading using opposite Dimensional International and AB Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International 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 Dimensional International High 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.