Correlation Between Ab Global and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Ab Global and Municipal 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 Global and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Risk and Municipal Bond Portfolio, you can compare the effects of market volatilities on Ab Global and Municipal 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 Global with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Municipal Bond.
Diversification Opportunities for Ab Global and Municipal Bond
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CABIX and Municipal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Municipal Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond Portfolio and Ab Global 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 Global Risk are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond Portfolio has no effect on the direction of Ab Global i.e., Ab Global and Municipal Bond go up and down completely randomly.
Pair Corralation between Ab Global and Municipal Bond
Assuming the 90 days horizon Ab Global Risk is expected to generate 3.05 times more return on investment than Municipal Bond. However, Ab Global is 3.05 times more volatile than Municipal Bond Portfolio. It trades about 0.09 of its potential returns per unit of risk. Municipal Bond Portfolio is currently generating about 0.05 per unit of risk. If you would invest 1,555 in Ab Global Risk on September 12, 2024 and sell it today you would earn a total of 254.00 from holding Ab Global Risk or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. Municipal Bond Portfolio
Performance |
| Timeline |
| Ab Global Risk |
| Municipal Bond Portfolio |
Ab Global and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Municipal Bond
The main advantage of trading using opposite Ab Global and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Municipal 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Ab Global vs. Prudential Government Income | Ab Global vs. Dreyfus Government Cash | Ab Global vs. Payden Government Fund | Ab Global vs. Sit Government Securities |
| Municipal Bond vs. Artisan High Income | Municipal Bond vs. Ab Global Risk | Municipal Bond vs. Fa 529 Aggressive | Municipal Bond vs. Ab Global Risk |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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