Correlation Between Ab Municipal and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Ab Municipal and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Western Asset.
Diversification Opportunities for Ab Municipal and Western Asset
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AUNCX and Western is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Ab Municipal i.e., Ab Municipal and Western Asset go up and down completely randomly.
Pair Corralation between Ab Municipal and Western Asset
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.44 times more return on investment than Western Asset. However, Ab Municipal Bond is 2.27 times less risky than Western Asset. It trades about 0.2 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.06 per unit of risk. If you would invest 1,073 in Ab Municipal Bond on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Ab Municipal Bond or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Municipal Bond vs. Western Asset Inflation
Performance |
| Timeline |
| Ab Municipal Bond |
| Western Asset Inflation |
Ab Municipal and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Western Asset
The main advantage of trading using opposite Ab Municipal and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Iaadx | Western Asset vs. Abr 7525 Volatility | Western Asset vs. Ab Value Fund | Western Asset vs. Bbh Partner Fund |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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