Correlation Between Ab Bond and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Pear Tree 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 Bond and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and Pear Tree Polaris, you can compare the effects of market volatilities on Ab Bond and Pear Tree 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 Bond with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Pear Tree.
Diversification Opportunities for Ab Bond and Pear Tree
Very poor diversification
The 3 months correlation between ABNCX and Pear is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris and Ab Bond 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 Bond Inflation are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Ab Bond i.e., Ab Bond and Pear Tree go up and down completely randomly.
Pair Corralation between Ab Bond and Pear Tree
Assuming the 90 days horizon Ab Bond is expected to generate 3.03 times less return on investment than Pear Tree. But when comparing it to its historical volatility, Ab Bond Inflation is 2.74 times less risky than Pear Tree. It trades about 0.05 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 945.00 in Pear Tree Polaris on September 3, 2024 and sell it today you would earn a total of 202.00 from holding Pear Tree Polaris or generate 21.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Pear Tree Polaris
Performance |
| Timeline |
| Ab Bond Inflation |
| Pear Tree Polaris |
Ab Bond and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Pear Tree
The main advantage of trading using opposite Ab Bond and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Ab Bond vs. Vanguard Short Term Inflation Protected | Ab Bond vs. Vanguard Short Term Inflation Protected | Ab Bond vs. T Rowe Price | Ab Bond vs. T Rowe Price |
| Pear Tree vs. Dws Government Money | Pear Tree vs. Blackrock Government Bond | Pear Tree vs. Dreyfus Government Cash | Pear Tree vs. Ab Government Exchange |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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