Correlation Between Ab Bond and Short-term Government
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Short-term Government 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 Short-term Government 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 Short Term Government Fund, you can compare the effects of market volatilities on Ab Bond and Short-term Government 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 Short-term Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Short-term Government.
Diversification Opportunities for Ab Bond and Short-term Government
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABNTX and Short-term is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short-term Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of Ab Bond i.e., Ab Bond and Short-term Government go up and down completely randomly.
Pair Corralation between Ab Bond and Short-term Government
Assuming the 90 days horizon Ab Bond Inflation is expected to generate 1.71 times more return on investment than Short-term Government. However, Ab Bond is 1.71 times more volatile than Short Term Government Fund. It trades about 0.11 of its potential returns per unit of risk. Short Term Government Fund is currently generating about 0.1 per unit of risk. If you would invest 963.00 in Ab Bond Inflation on November 8, 2024 and sell it today you would earn a total of 57.00 from holding Ab Bond Inflation or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Short Term Government Fund
Performance |
| Timeline |
| Ab Bond Inflation |
| Short Term Government |
Ab Bond and Short-term Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Short-term Government
The main advantage of trading using opposite Ab Bond and Short-term Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Short-term Government 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 Short-term Government will offset losses from the drop in Short-term Government's long position.| Ab Bond vs. Franklin Adjustable Government | Ab Bond vs. Transamerica Intermediate Muni | Ab Bond vs. Nuveen Strategic Municipal | Ab Bond vs. Ishares Municipal Bond |
| Short-term Government vs. Voya Government Money | Short-term Government vs. Inverse Government Long | Short-term Government vs. Davis Government Bond | Short-term Government vs. Virtus Seix Government |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |