Correlation Between Ab Bond and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Pace Municipal 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 Pace Municipal 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 Pace Municipal Fixed, you can compare the effects of market volatilities on Ab Bond and Pace Municipal 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 Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Pace Municipal.
Diversification Opportunities for Ab Bond and Pace Municipal
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ABNTX and Pace is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed 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 Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of Ab Bond i.e., Ab Bond and Pace Municipal go up and down completely randomly.
Pair Corralation between Ab Bond and Pace Municipal
Assuming the 90 days horizon Ab Bond Inflation is expected to generate 1.1 times more return on investment than Pace Municipal. However, Ab Bond is 1.1 times more volatile than Pace Municipal Fixed. It trades about 0.12 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about 0.11 per unit of risk. If you would invest 981.00 in Ab Bond Inflation on August 24, 2024 and sell it today you would earn a total of 31.00 from holding Ab Bond Inflation or generate 3.16% 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. Pace Municipal Fixed
Performance |
| Timeline |
| Ab Bond Inflation |
| Pace Municipal Fixed |
Ab Bond and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Pace Municipal
The main advantage of trading using opposite Ab Bond and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Pace Municipal 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| Ab Bond vs. Oil Gas Ultrasector | Ab Bond vs. Hennessy Bp Energy | Ab Bond vs. Dreyfus Natural Resources | Ab Bond vs. Alpsalerian Energy Infrastructure |
| Pace Municipal vs. Vanguard Intermediate Term Tax Exempt | Pace Municipal vs. Tax Exempt Bond | Pace Municipal vs. Tax Exempt Bond | Pace Municipal vs. Tax Exempt Bond |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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