Correlation Between Ab Global and Diversified Municipal
Can any of the company-specific risk be diversified away by investing in both Ab Global and Diversified 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 Global and Diversified Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Bond and Diversified Municipal Portfolio, you can compare the effects of market volatilities on Ab Global and Diversified 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 Global with a short position of Diversified Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Diversified Municipal.
Diversification Opportunities for Ab Global and Diversified Municipal
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ANAYX and Diversified is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and Diversified Municipal Portfoli in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Municipal and Ab Global 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 Global Bond are associated (or correlated) with Diversified Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Municipal has no effect on the direction of Ab Global i.e., Ab Global and Diversified Municipal go up and down completely randomly.
Pair Corralation between Ab Global and Diversified Municipal
Assuming the 90 days horizon Ab Global Bond is expected to generate 1.88 times more return on investment than Diversified Municipal. However, Ab Global is 1.88 times more volatile than Diversified Municipal Portfolio. It trades about 0.09 of its potential returns per unit of risk. Diversified Municipal Portfolio is currently generating about 0.13 per unit of risk. If you would invest 668.00 in Ab Global Bond on September 3, 2024 and sell it today you would earn a total of 28.00 from holding Ab Global Bond or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Bond vs. Diversified Municipal Portfoli
Performance |
| Timeline |
| Ab Global Bond |
| Diversified Municipal |
Ab Global and Diversified Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Diversified Municipal
The main advantage of trading using opposite Ab Global and Diversified Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Diversified 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 Diversified Municipal will offset losses from the drop in Diversified Municipal's long position.| Ab Global vs. Prudential Core Conservative | Ab Global vs. Calvert Conservative Allocation | Ab Global vs. Lord Abbett Diversified | Ab Global vs. Pgim Conservative Retirement |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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