Correlation Between Ab Impact and Financial Services
Can any of the company-specific risk be diversified away by investing in both Ab Impact and Financial Services 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 Financial Services 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 Financial Services Portfolio, you can compare the effects of market volatilities on Ab Impact and Financial Services 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 Financial Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Financial Services.
Diversification Opportunities for Ab Impact and Financial Services
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABIMX and Financial is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Financial Services Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services 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 Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Ab Impact i.e., Ab Impact and Financial Services go up and down completely randomly.
Pair Corralation between Ab Impact and Financial Services
Assuming the 90 days horizon Ab Impact is expected to generate 7.17 times less return on investment than Financial Services. But when comparing it to its historical volatility, Ab Impact Municipal is 4.36 times less risky than Financial Services. It trades about 0.15 of its potential returns per unit of risk. Financial Services Portfolio is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 951.00 in Financial Services Portfolio on August 25, 2024 and sell it today you would earn a total of 85.00 from holding Financial Services Portfolio or generate 8.94% 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. Financial Services Portfolio
Performance |
| Timeline |
| Ab Impact Municipal |
| Financial Services |
Ab Impact and Financial Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Impact and Financial Services
The main advantage of trading using opposite Ab Impact and Financial Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact position performs unexpectedly, Financial Services 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 Financial Services will offset losses from the drop in Financial Services' long position.| Ab Impact vs. Queens Road Small | Ab Impact vs. Palm Valley Capital | Ab Impact vs. Fidelity Small Cap | Ab Impact vs. Heartland Value Plus |
| Financial Services vs. California High Yield Municipal | Financial Services vs. Ab Impact Municipal | Financial Services vs. Nuveen All American Municipal | Financial Services vs. Franklin High Yield |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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