Correlation Between Absolute Convertible and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Ishares 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 Absolute Convertible and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Ishares Municipal Bond, you can compare the effects of market volatilities on Absolute Convertible and Ishares 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 Absolute Convertible with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Ishares Municipal.
Diversification Opportunities for Absolute Convertible and Ishares Municipal
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Absolute and Ishares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Ishares Municipal go up and down completely randomly.
Pair Corralation between Absolute Convertible and Ishares Municipal
Assuming the 90 days horizon Absolute Convertible is expected to generate 2.48 times less return on investment than Ishares Municipal. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 2.19 times less risky than Ishares Municipal. It trades about 0.38 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 1,105 in Ishares Municipal Bond on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Ishares Municipal Bond or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Ishares Municipal Bond
Performance |
| Timeline |
| Absolute Convertible |
| Ishares Municipal Bond |
Absolute Convertible and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Ishares Municipal
The main advantage of trading using opposite Absolute Convertible and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Ishares 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Absolute Convertible vs. Allianzgi Convertible Income | Absolute Convertible vs. Lord Abbett Convertible | Absolute Convertible vs. Rationalpier 88 Convertible | Absolute Convertible vs. Virtus Convertible |
| Ishares Municipal vs. Blackrock California Municipal | Ishares Municipal vs. Blackrock Balanced Capital | Ishares Municipal vs. Blackrock Eurofund Class | Ishares Municipal vs. Blackrock Funds |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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