Correlation Between Ab Impact and Us Government
Can any of the company-specific risk be diversified away by investing in both Ab Impact and Us Government 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 Us Government 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 Us Government Plus, you can compare the effects of market volatilities on Ab Impact and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Us Government.
Diversification Opportunities for Ab Impact and Us Government
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABIMX and GVPIX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Us Government Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Plus 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Plus has no effect on the direction of Ab Impact i.e., Ab Impact and Us Government go up and down completely randomly.
Pair Corralation between Ab Impact and Us Government
Assuming the 90 days horizon Ab Impact is expected to generate 1.19 times less return on investment than Us Government. But when comparing it to its historical volatility, Ab Impact Municipal is 3.84 times less risky than Us Government. It trades about 0.21 of its potential returns per unit of risk. Us Government Plus is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,483 in Us Government Plus on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Us Government Plus or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Impact Municipal vs. Us Government Plus
Performance |
| Timeline |
| Ab Impact Municipal |
| Us Government Plus |
Ab Impact and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Impact and Us Government
The main advantage of trading using opposite Ab Impact and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Ab Impact vs. Barings Emerging Markets | Ab Impact vs. Artisan Emerging Markets | Ab Impact vs. Black Oak Emerging | Ab Impact vs. Ashmore Emerging Markets |
| Us Government vs. Short Real Estate | Us Government vs. Short Real Estate | Us Government vs. Ultrashort Mid Cap Profund | Us Government vs. Ultrashort Mid Cap Profund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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