Correlation Between Ishares Municipal and Ab Global
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Ab Global 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 Ishares Municipal and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Ab Global Real, you can compare the effects of market volatilities on Ishares Municipal and Ab Global 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 Ishares Municipal with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Ab Global.
Diversification Opportunities for Ishares Municipal and Ab Global
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ishares and ARECX is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Ab Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Real and Ishares 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 Ishares Municipal Bond are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Real has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Ab Global go up and down completely randomly.
Pair Corralation between Ishares Municipal and Ab Global
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.19 times more return on investment than Ab Global. However, Ishares Municipal Bond is 5.22 times less risky than Ab Global. It trades about 0.48 of its potential returns per unit of risk. Ab Global Real is currently generating about -0.03 per unit of risk. If you would invest 1,105 in Ishares Municipal Bond on September 13, 2024 and sell it today you would earn a total of 13.00 from holding Ishares Municipal Bond or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Ab Global Real
Performance |
| Timeline |
| Ishares Municipal Bond |
| Ab Global Real |
Ishares Municipal and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Ab Global
The main advantage of trading using opposite Ishares Municipal and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Ab Global 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 Ab Global will offset losses from the drop in Ab Global's long position.| Ishares Municipal vs. Calamos Dynamic Convertible | Ishares Municipal vs. Allianzgi Convertible Income | Ishares Municipal vs. Fidelity Sai Convertible | Ishares Municipal vs. Absolute Convertible Arbitrage |
| Ab Global vs. Sit Government Securities | Ab Global vs. Davis Government Bond | Ab Global vs. Elfun Government Money | Ab Global vs. Long Term Government 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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