Correlation Between Ab Municipal and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Gmo Emerging 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 Gmo Emerging 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 Gmo Emerging Markets, you can compare the effects of market volatilities on Ab Municipal and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Gmo Emerging.
Diversification Opportunities for Ab Municipal and Gmo Emerging
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between AUNCX and Gmo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Ab Municipal i.e., Ab Municipal and Gmo Emerging go up and down completely randomly.
Pair Corralation between Ab Municipal and Gmo Emerging
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.13 times more return on investment than Gmo Emerging. However, Ab Municipal Bond is 7.65 times less risky than Gmo Emerging. It trades about 0.1 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about -0.06 per unit of risk. If you would invest 1,060 in Ab Municipal Bond on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Ab Municipal Bond or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Bond vs. Gmo Emerging Markets
Performance |
| Timeline |
| Ab Municipal Bond |
| Gmo Emerging Markets |
Ab Municipal and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Gmo Emerging
The main advantage of trading using opposite Ab Municipal and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging'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 |
| Gmo Emerging vs. Great West Real Estate | Gmo Emerging vs. Jhancock Real Estate | Gmo Emerging vs. Dunham Real Estate | Gmo Emerging vs. Goldman Sachs Real |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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