Correlation Between Ab Impact and Energy Basic
Can any of the company-specific risk be diversified away by investing in both Ab Impact and Energy Basic 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 Energy Basic 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 Energy Basic Materials, you can compare the effects of market volatilities on Ab Impact and Energy Basic 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 Energy Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Energy Basic.
Diversification Opportunities for Ab Impact and Energy Basic
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABIMX and Energy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Energy Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Basic Materials 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 Energy Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Basic Materials has no effect on the direction of Ab Impact i.e., Ab Impact and Energy Basic go up and down completely randomly.
Pair Corralation between Ab Impact and Energy Basic
Assuming the 90 days horizon Ab Impact Municipal is expected to generate 0.3 times more return on investment than Energy Basic. However, Ab Impact Municipal is 3.32 times less risky than Energy Basic. It trades about 0.04 of its potential returns per unit of risk. Energy Basic Materials is currently generating about 0.0 per unit of risk. If you would invest 904.00 in Ab Impact Municipal on October 15, 2024 and sell it today you would earn a total of 63.00 from holding Ab Impact Municipal or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Impact Municipal vs. Energy Basic Materials
Performance |
| Timeline |
| Ab Impact Municipal |
| Energy Basic Materials |
Ab Impact and Energy Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Impact and Energy Basic
The main advantage of trading using opposite Ab Impact and Energy Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact position performs unexpectedly, Energy Basic 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 Energy Basic will offset losses from the drop in Energy Basic's long position.| Ab Impact vs. Morningstar Defensive Bond | Ab Impact vs. Intermediate Term Bond Fund | Ab Impact vs. Dws Government Money | Ab Impact vs. Western Asset Municipal |
| Energy Basic vs. Moderately Aggressive Balanced | Energy Basic vs. Transamerica Cleartrack Retirement | Energy Basic vs. College Retirement Equities | Energy Basic vs. Great West Moderately Aggressive |
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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