Correlation Between New York and Ab Global
Can any of the company-specific risk be diversified away by investing in both New York and Ab Global 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 New York and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Municipal and Ab Global Bond, you can compare the effects of market volatilities on New York and Ab Global 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 New York with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Ab Global.
Diversification Opportunities for New York and Ab Global
Very poor diversification
The 3 months correlation between New and ANAYX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding New York Municipal and Ab Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Bond and New York 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 New York Municipal are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Bond has no effect on the direction of New York i.e., New York and Ab Global go up and down completely randomly.
Pair Corralation between New York and Ab Global
Assuming the 90 days horizon New York is expected to generate 2.47 times less return on investment than Ab Global. But when comparing it to its historical volatility, New York Municipal is 2.12 times less risky than Ab Global. It trades about 0.05 of its potential returns per unit of risk. Ab Global Bond is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 667.00 in Ab Global Bond on August 27, 2024 and sell it today you would earn a total of 21.00 from holding Ab Global Bond or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Municipal vs. Ab Global Bond
Performance |
| Timeline |
| New York Municipal |
| Ab Global Bond |
New York and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Ab Global
The main advantage of trading using opposite New York and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York position performs unexpectedly, Ab Global 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 Global will offset losses from the drop in Ab Global's long position.| New York vs. Rational Strategic Allocation | New York vs. Qs Large Cap | New York vs. Nuveen Winslow Large Cap | New York vs. Gmo Equity Allocation |
| Ab Global vs. Fidelity Advisor Diversified | Ab Global vs. Prudential Core Conservative | Ab Global vs. Calvert Conservative Allocation | Ab Global vs. Adams Diversified Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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