Correlation Between Ab Municipal and American Beacon
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and American Beacon 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 Beacon 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 Beacon Ahl, you can compare the effects of market volatilities on Ab Municipal and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and American Beacon.
Diversification Opportunities for Ab Municipal and American Beacon
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between AUNTX and American is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and American Beacon Ahl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ahl 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ahl has no effect on the direction of Ab Municipal i.e., Ab Municipal and American Beacon go up and down completely randomly.
Pair Corralation between Ab Municipal and American Beacon
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.27 times more return on investment than American Beacon. However, Ab Municipal Bond is 3.74 times less risky than American Beacon. It trades about 0.23 of its potential returns per unit of risk. American Beacon Ahl is currently generating about -0.01 per unit of risk. If you would invest 1,067 in Ab Municipal Bond on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Ab Municipal Bond or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Municipal Bond vs. American Beacon Ahl
Performance |
| Timeline |
| Ab Municipal Bond |
| American Beacon Ahl |
Ab Municipal and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and American Beacon
The main advantage of trading using opposite Ab Municipal and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Ab Municipal vs. Tiaa Cref Real Estate | Ab Municipal vs. Jhancock Real Estate | Ab Municipal vs. Msif Real Estate | Ab Municipal vs. Prudential Real Estate |
| American Beacon vs. Jhancock Disciplined Value | American Beacon vs. Tax Managed Large Cap | American Beacon vs. Strategic Allocation Aggressive | American Beacon vs. Alternative Asset Allocation |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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