Correlation Between Ab Bond and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Old Westbury 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 Old Westbury 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 Old Westbury Municipal, you can compare the effects of market volatilities on Ab Bond and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Old Westbury.
Diversification Opportunities for Ab Bond and Old Westbury
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ANBIX and Old is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Municipal has no effect on the direction of Ab Bond i.e., Ab Bond and Old Westbury go up and down completely randomly.
Pair Corralation between Ab Bond and Old Westbury
Assuming the 90 days horizon Ab Bond is expected to generate 3.11 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Ab Bond Inflation is 1.23 times less risky than Old Westbury. It trades about 0.05 of its potential returns per unit of risk. Old Westbury Municipal is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,147 in Old Westbury Municipal on August 27, 2024 and sell it today you would earn a total of 7.00 from holding Old Westbury Municipal or generate 0.61% 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. Old Westbury Municipal
Performance |
| Timeline |
| Ab Bond Inflation |
| Old Westbury Municipal |
Ab Bond and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Old Westbury
The main advantage of trading using opposite Ab Bond and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Ab Bond vs. Ab Global E | Ab Bond vs. Ab Global E | Ab Bond vs. Ab Global E | Ab Bond vs. Ab Minnesota Portfolio |
| Old Westbury vs. Nuveen Minnesota Municipal | Old Westbury vs. Morningstar Defensive Bond | Old Westbury vs. Intermediate Term Bond Fund | Old Westbury vs. Ishares Municipal Bond |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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