Correlation Between Ab Municipal and Steward Select
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Steward Select 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 Steward Select 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 Steward Select Bond, you can compare the effects of market volatilities on Ab Municipal and Steward Select 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 Steward Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Steward Select.
Diversification Opportunities for Ab Municipal and Steward Select
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between AUNTX and Steward is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Steward Select Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Select Bond 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 Steward Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Select Bond has no effect on the direction of Ab Municipal i.e., Ab Municipal and Steward Select go up and down completely randomly.
Pair Corralation between Ab Municipal and Steward Select
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.58 times more return on investment than Steward Select. However, Ab Municipal Bond is 1.72 times less risky than Steward Select. It trades about 0.21 of its potential returns per unit of risk. Steward Select Bond is currently generating about 0.07 per unit of risk. If you would invest 1,066 in Ab Municipal Bond on August 29, 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. Steward Select Bond
Performance |
| Timeline |
| Ab Municipal Bond |
| Steward Select Bond |
Ab Municipal and Steward Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Steward Select
The main advantage of trading using opposite Ab Municipal and Steward Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Steward Select 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 Steward Select will offset losses from the drop in Steward Select's long position.| Ab Municipal vs. Vanguard Limited Term Tax Exempt | Ab Municipal vs. HUMANA INC | Ab Municipal vs. Aquagold International | Ab Municipal vs. Barloworld Ltd ADR |
| Steward Select vs. Ab Municipal Bond | Steward Select vs. The Hartford Inflation | Steward Select vs. Ab Municipal Bond | Steward Select vs. The Hartford Inflation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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