Correlation Between Ab Minnesota and Ab Income
Can any of the company-specific risk be diversified away by investing in both Ab Minnesota and Ab Income 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 Minnesota and Ab Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Minnesota Portfolio and Ab Income Fund, you can compare the effects of market volatilities on Ab Minnesota and Ab Income 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 Minnesota with a short position of Ab Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Minnesota and Ab Income.
Diversification Opportunities for Ab Minnesota and Ab Income
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMNAX and AKGCX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ab Minnesota Portfolio and Ab Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Income Fund and Ab Minnesota 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 Minnesota Portfolio are associated (or correlated) with Ab Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Income Fund has no effect on the direction of Ab Minnesota i.e., Ab Minnesota and Ab Income go up and down completely randomly.
Pair Corralation between Ab Minnesota and Ab Income
Assuming the 90 days horizon Ab Minnesota Portfolio is expected to generate 99.22 times more return on investment than Ab Income. However, Ab Minnesota is 99.22 times more volatile than Ab Income Fund. It trades about 0.04 of its potential returns per unit of risk. Ab Income Fund is currently generating about 0.03 per unit of risk. If you would invest 909.00 in Ab Minnesota Portfolio on September 3, 2024 and sell it today you would earn a total of 61.00 from holding Ab Minnesota Portfolio or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Minnesota Portfolio vs. Ab Income Fund
Performance |
| Timeline |
| Ab Minnesota Portfolio |
| Ab Income Fund |
Ab Minnesota and Ab Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Minnesota and Ab Income
The main advantage of trading using opposite Ab Minnesota and Ab Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Minnesota position performs unexpectedly, Ab Income 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 Ab Income will offset losses from the drop in Ab Income's long position.| Ab Minnesota vs. Franklin Minnesota Tax Free | Ab Minnesota vs. Franklin Minnesota Tax Free | Ab Minnesota vs. Columbia Minnesota Tax Exempt | Ab Minnesota vs. Columbia Minnesota Tax Exempt |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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