Correlation Between Ab Bond and American Funds
Can any of the company-specific risk be diversified away by investing in both Ab Bond and American Funds 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 American Funds 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 American Funds 2060, you can compare the effects of market volatilities on Ab Bond and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and American Funds.
Diversification Opportunities for Ab Bond and American Funds
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ANBIX and American is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and American Funds 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2060 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2060 has no effect on the direction of Ab Bond i.e., Ab Bond and American Funds go up and down completely randomly.
Pair Corralation between Ab Bond and American Funds
Assuming the 90 days horizon Ab Bond is expected to generate 3.21 times less return on investment than American Funds. But when comparing it to its historical volatility, Ab Bond Inflation is 2.67 times less risky than American Funds. It trades about 0.07 of its potential returns per unit of risk. American Funds 2060 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,379 in American Funds 2060 on September 12, 2024 and sell it today you would earn a total of 450.00 from holding American Funds 2060 or generate 32.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. American Funds 2060
Performance |
| Timeline |
| Ab Bond Inflation |
| American Funds 2060 |
Ab Bond and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and American Funds
The main advantage of trading using opposite Ab Bond and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Ab Bond vs. SCOR PK | Ab Bond vs. Morningstar Unconstrained Allocation | Ab Bond vs. Thrivent High Yield | Ab Bond vs. Via Renewables |
| American Funds vs. Bbh Intermediate Municipal | American Funds vs. Versatile Bond Portfolio | American Funds vs. T Rowe Price | American Funds vs. Ab Bond Inflation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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