Correlation Between Ab Municipal and American Funds
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and American Funds 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 American Funds 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 American Funds Inflation, you can compare the effects of market volatilities on Ab Municipal and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and American Funds.
Diversification Opportunities for Ab Municipal and American Funds
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between AUNCX and American is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inflation has no effect on the direction of Ab Municipal i.e., Ab Municipal and American Funds go up and down completely randomly.
Pair Corralation between Ab Municipal and American Funds
Assuming the 90 days horizon Ab Municipal is expected to generate 1.18 times less return on investment than American Funds. But when comparing it to its historical volatility, Ab Municipal Bond is 2.36 times less risky than American Funds. It trades about 0.14 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 882.00 in American Funds Inflation on September 1, 2024 and sell it today you would earn a total of 58.00 from holding American Funds Inflation or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Ab Municipal Bond vs. American Funds Inflation
Performance |
| Timeline |
| Ab Municipal Bond |
| American Funds Inflation |
Ab Municipal and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and American Funds
The main advantage of trading using opposite Ab Municipal and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Pace Large Growth | American Funds vs. Legg Mason Bw | American Funds vs. Tax Managed Large Cap | American Funds vs. Strategic Allocation Aggressive |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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