Correlation Between Ab Value and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Ab Value and Municipal Bond 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 Value and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Value Fund and Municipal Bond Portfolio, you can compare the effects of market volatilities on Ab Value and Municipal Bond 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 Value with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Municipal Bond.
Diversification Opportunities for Ab Value and Municipal Bond
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABVCX and Municipal is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Municipal Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond Portfolio and Ab Value 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 Value Fund are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond Portfolio has no effect on the direction of Ab Value i.e., Ab Value and Municipal Bond go up and down completely randomly.
Pair Corralation between Ab Value and Municipal Bond
Assuming the 90 days horizon Ab Value Fund is expected to generate 5.93 times more return on investment than Municipal Bond. However, Ab Value is 5.93 times more volatile than Municipal Bond Portfolio. It trades about 0.09 of its potential returns per unit of risk. Municipal Bond Portfolio is currently generating about 0.03 per unit of risk. If you would invest 1,499 in Ab Value Fund on September 4, 2024 and sell it today you would earn a total of 577.00 from holding Ab Value Fund or generate 38.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Value Fund vs. Municipal Bond Portfolio
Performance |
| Timeline |
| Ab Value Fund |
| Municipal Bond Portfolio |
Ab Value and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Value and Municipal Bond
The main advantage of trading using opposite Ab Value and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Ab Value vs. Balanced Fund Investor | Ab Value vs. T Rowe Price | Ab Value vs. Ab Small Cap | Ab Value vs. Qs Growth Fund |
| Municipal Bond vs. Materials Portfolio Fidelity | Municipal Bond vs. T Rowe Price | Municipal Bond vs. Ab Value Fund | Municipal Bond vs. Acm Dynamic Opportunity |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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