Correlation Between Ab Bond and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Ab 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 Ab 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 Ab Municipal Bond, you can compare the effects of market volatilities on Ab Bond and Ab 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 Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Ab Municipal.
Diversification Opportunities for Ab Bond and Ab Municipal
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ANBIX and AUNTX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond 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 Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Ab Bond i.e., Ab Bond and Ab Municipal go up and down completely randomly.
Pair Corralation between Ab Bond and Ab Municipal
Assuming the 90 days horizon Ab Bond Inflation is expected to generate 1.52 times more return on investment than Ab Municipal. However, Ab Bond is 1.52 times more volatile than Ab Municipal Bond. It trades about 0.08 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.09 per unit of risk. If you would invest 946.00 in Ab Bond Inflation on December 7, 2024 and sell it today you would earn a total of 95.00 from holding Ab Bond Inflation or generate 10.04% 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. Ab Municipal Bond
Performance |
| Timeline |
| Ab Bond Inflation |
| Ab Municipal Bond |
Ab Bond and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Ab Municipal
The main advantage of trading using opposite Ab Bond and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Ab 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 Ab Municipal will offset losses from the drop in Ab Municipal's long position.| Ab Bond vs. Doubleline Total Return | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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