Correlation Between Ab Municipal and Ab Select
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Ab Select 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 Municipal and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Bond and Ab Select Equity, you can compare the effects of market volatilities on Ab Municipal and Ab Select 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 Municipal with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Ab Select.
Diversification Opportunities for Ab Municipal and Ab Select
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AUNCX and AUUYX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity and Ab Municipal 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 Municipal Bond are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Ab Municipal i.e., Ab Municipal and Ab Select go up and down completely randomly.
Pair Corralation between Ab Municipal and Ab Select
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.13 times more return on investment than Ab Select. However, Ab Municipal Bond is 7.45 times less risky than Ab Select. It trades about -0.23 of its potential returns per unit of risk. Ab Select Equity is currently generating about -0.26 per unit of risk. If you would invest 1,082 in Ab Municipal Bond on October 10, 2024 and sell it today you would lose (12.00) from holding Ab Municipal Bond or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Bond vs. Ab Select Equity
Performance |
| Timeline |
| Ab Municipal Bond |
| Ab Select Equity |
Ab Municipal and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Ab Select
The main advantage of trading using opposite Ab Municipal and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Ab Select 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 Select will offset losses from the drop in Ab Select's long position.| Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Minnesota Portfolio |
| Ab Select vs. Pace International Equity | Ab Select vs. Morningstar International Equity | Ab Select vs. Guidemark E Fixed | Ab Select vs. Franklin Equity Income |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Positions Ratings 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 | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |