Correlation Between Ab Bond and Chn Strs
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Chn Strs 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 Chn Strs 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 Chn Strs Insti, you can compare the effects of market volatilities on Ab Bond and Chn Strs 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 Chn Strs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Chn Strs.
Diversification Opportunities for Ab Bond and Chn Strs
Very weak diversification
The 3 months correlation between ABNOX and Chn is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Chn Strs Insti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chn Strs Insti 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 Chn Strs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chn Strs Insti has no effect on the direction of Ab Bond i.e., Ab Bond and Chn Strs go up and down completely randomly.
Pair Corralation between Ab Bond and Chn Strs
Assuming the 90 days horizon Ab Bond Inflation is expected to generate 0.23 times more return on investment than Chn Strs. However, Ab Bond Inflation is 4.31 times less risky than Chn Strs. It trades about -0.03 of its potential returns per unit of risk. Chn Strs Insti is currently generating about -0.13 per unit of risk. If you would invest 1,013 in Ab Bond Inflation on October 22, 2024 and sell it today you would lose (3.00) from holding Ab Bond Inflation or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Chn Strs Insti
Performance |
| Timeline |
| Ab Bond Inflation |
| Chn Strs Insti |
Ab Bond and Chn Strs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Chn Strs
The main advantage of trading using opposite Ab Bond and Chn Strs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Chn Strs 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 Chn Strs will offset losses from the drop in Chn Strs' long position.| Ab Bond vs. First Eagle Gold | Ab Bond vs. Great West Goldman Sachs | Ab Bond vs. Fidelity Advisor Gold | Ab Bond vs. International Investors Gold |
| Chn Strs vs. Ab Bond Inflation | Chn Strs vs. Guidepath Managed Futures | Chn Strs vs. Short Duration Inflation | Chn Strs vs. Guggenheim Managed Futures |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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