Correlation Between Ab Municipal and Dfa One-year
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Dfa One-year 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 Dfa One-year 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 Dfa One Year Fixed, you can compare the effects of market volatilities on Ab Municipal and Dfa One-year 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 Dfa One-year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Dfa One-year.
Diversification Opportunities for Ab Municipal and Dfa One-year
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AUNCX and Dfa is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Dfa One Year Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa One Year 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 Dfa One-year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa One Year has no effect on the direction of Ab Municipal i.e., Ab Municipal and Dfa One-year go up and down completely randomly.
Pair Corralation between Ab Municipal and Dfa One-year
Assuming the 90 days horizon Ab Municipal is expected to generate 1.8 times less return on investment than Dfa One-year. In addition to that, Ab Municipal is 3.12 times more volatile than Dfa One Year Fixed. It trades about 0.07 of its total potential returns per unit of risk. Dfa One Year Fixed is currently generating about 0.42 per unit of volatility. If you would invest 977.00 in Dfa One Year Fixed on November 3, 2024 and sell it today you would earn a total of 48.00 from holding Dfa One Year Fixed or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ab Municipal Bond vs. Dfa One Year Fixed
Performance |
| Timeline |
| Ab Municipal Bond |
| Dfa One Year |
Ab Municipal and Dfa One-year Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Dfa One-year
The main advantage of trading using opposite Ab Municipal and Dfa One-year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Dfa One-year 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 Dfa One-year will offset losses from the drop in Dfa One-year's long position.| Ab Municipal vs. Goldman Sachs Technology | Ab Municipal vs. Specialized Technology Fund | Ab Municipal vs. Invesco Technology Fund | Ab Municipal vs. Columbia Global Technology |
| Dfa One-year vs. World Core Equity | Dfa One-year vs. Dfa International | Dfa One-year vs. Dimensional 2045 Target | Dfa One-year vs. Dimensional 2040 Target |
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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