Correlation Between Ab Municipal and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Old Westbury 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 Old Westbury 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 Old Westbury Municipal, you can compare the effects of market volatilities on Ab Municipal and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Old Westbury.
Diversification Opportunities for Ab Municipal and Old Westbury
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AUNTX and Old is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Municipal has no effect on the direction of Ab Municipal i.e., Ab Municipal and Old Westbury go up and down completely randomly.
Pair Corralation between Ab Municipal and Old Westbury
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.93 times more return on investment than Old Westbury. However, Ab Municipal Bond is 1.07 times less risky than Old Westbury. It trades about 0.08 of its potential returns per unit of risk. Old Westbury Municipal is currently generating about 0.06 per unit of risk. If you would invest 1,049 in Ab Municipal Bond on November 3, 2024 and sell it today you would earn a total of 23.00 from holding Ab Municipal Bond or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Bond vs. Old Westbury Municipal
Performance |
| Timeline |
| Ab Municipal Bond |
| Old Westbury Municipal |
Ab Municipal and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Old Westbury
The main advantage of trading using opposite Ab Municipal and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Ab Municipal vs. Multisector Bond Sma | Ab Municipal vs. Artisan High Income | Ab Municipal vs. Barings High Yield | Ab Municipal vs. Ab Bond Inflation |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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