Correlation Between Ab Municipal and Voya Bond
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Voya Bond 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 Voya Bond 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 Voya Bond Index, you can compare the effects of market volatilities on Ab Municipal and Voya Bond 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 Voya Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Voya Bond.
Diversification Opportunities for Ab Municipal and Voya Bond
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AUNTX and Voya is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Voya Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Bond Index 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 Voya Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Bond Index has no effect on the direction of Ab Municipal i.e., Ab Municipal and Voya Bond go up and down completely randomly.
Pair Corralation between Ab Municipal and Voya Bond
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.4 times more return on investment than Voya Bond. However, Ab Municipal Bond is 2.49 times less risky than Voya Bond. It trades about 0.23 of its potential returns per unit of risk. Voya Bond Index is currently generating about 0.08 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 | 100.0% |
| Values | Daily Returns |
Ab Municipal Bond vs. Voya Bond Index
Performance |
| Timeline |
| Ab Municipal Bond |
| Voya Bond Index |
Ab Municipal and Voya Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Voya Bond
The main advantage of trading using opposite Ab Municipal and Voya Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Voya Bond 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 Voya Bond will offset losses from the drop in Voya Bond'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 |
| Voya Bond vs. Voya Bond Index | Voya Bond vs. Voya Limited Maturity | Voya Bond vs. Voya Limited Maturity | Voya Bond vs. Voya Bond Index |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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