Correlation Between American Funds and Ab Bond
Can any of the company-specific risk be diversified away by investing in both American Funds and Ab 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 American Funds and Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2055 and Ab Bond Inflation, you can compare the effects of market volatilities on American Funds and Ab 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 American Funds with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ab Bond.
Diversification Opportunities for American Funds and Ab Bond
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and ANBIX is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2055 and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation and American Funds 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 American Funds 2055 are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of American Funds i.e., American Funds and Ab Bond go up and down completely randomly.
Pair Corralation between American Funds and Ab Bond
Assuming the 90 days horizon American Funds 2055 is expected to generate 3.81 times more return on investment than Ab Bond. However, American Funds is 3.81 times more volatile than Ab Bond Inflation. It trades about 0.17 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.2 per unit of risk. If you would invest 2,593 in American Funds 2055 on October 26, 2024 and sell it today you would earn a total of 58.00 from holding American Funds 2055 or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2055 vs. Ab Bond Inflation
Performance |
| Timeline |
| American Funds 2055 |
| Ab Bond Inflation |
American Funds and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Ab Bond
The main advantage of trading using opposite American Funds and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Ab 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 Ab Bond will offset losses from the drop in Ab Bond's long position.| American Funds vs. Ab Bond Inflation | American Funds vs. Transamerica Intermediate Muni | American Funds vs. Ambrus Core Bond | American Funds vs. Versatile Bond Portfolio |
| Ab Bond vs. Financials Ultrasector Profund | Ab Bond vs. T Rowe Price | Ab Bond vs. Gabelli Global Financial | Ab Bond vs. Fidelity Advisor Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |