Correlation Between Ab Impact and Large Cap
Can any of the company-specific risk be diversified away by investing in both Ab Impact and Large Cap 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 Impact and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Impact Municipal and Large Cap E, you can compare the effects of market volatilities on Ab Impact and Large Cap 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 Impact with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Large Cap.
Diversification Opportunities for Ab Impact and Large Cap
Good diversification
The 3 months correlation between ABIMX and Large is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Large Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap E and Ab Impact 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 Impact Municipal are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap E has no effect on the direction of Ab Impact i.e., Ab Impact and Large Cap go up and down completely randomly.
Pair Corralation between Ab Impact and Large Cap
Assuming the 90 days horizon Ab Impact is expected to generate 3.31 times less return on investment than Large Cap. But when comparing it to its historical volatility, Ab Impact Municipal is 2.48 times less risky than Large Cap. It trades about 0.2 of its potential returns per unit of risk. Large Cap E is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,499 in Large Cap E on September 5, 2024 and sell it today you would earn a total of 136.00 from holding Large Cap E or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Impact Municipal vs. Large Cap E
Performance |
| Timeline |
| Ab Impact Municipal |
| Large Cap E |
Ab Impact and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Impact and Large Cap
The main advantage of trading using opposite Ab Impact and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Ab Impact vs. Deutsche Real Estate | Ab Impact vs. Columbia Real Estate | Ab Impact vs. Vanguard Reit Index | Ab Impact vs. Real Estate Ultrasector |
| Large Cap vs. Ab Impact Municipal | Large Cap vs. Artisan High Income | Large Cap vs. Ab Bond Inflation | Large Cap vs. Transamerica Funds |
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.
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