Correlation Between Capital World and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Capital World and Ab Municipal 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 Capital World and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Ab Municipal Bond, you can compare the effects of market volatilities on Capital World and Ab Municipal 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 Capital World with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Ab Municipal.
Diversification Opportunities for Capital World and Ab Municipal
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and AUNYX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond and Capital World 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 Capital World Growth are associated (or correlated) with Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Capital World i.e., Capital World and Ab Municipal go up and down completely randomly.
Pair Corralation between Capital World and Ab Municipal
Assuming the 90 days horizon Capital World Growth is expected to under-perform the Ab Municipal. In addition to that, Capital World is 3.3 times more volatile than Ab Municipal Bond. It trades about -0.04 of its total potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.02 per unit of volatility. If you would invest 1,079 in Ab Municipal Bond on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Ab Municipal Bond or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Ab Municipal Bond
Performance |
| Timeline |
| Capital World Growth |
| Ab Municipal Bond |
Capital World and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Ab Municipal
The main advantage of trading using opposite Capital World and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Ab Municipal 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 Municipal will offset losses from the drop in Ab Municipal's long position.| Capital World vs. Ab Municipal Bond | Capital World vs. Ab Bond Inflation | Capital World vs. Lord Abbett Inflation | Capital World vs. Vy Blackrock Inflation |
| Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Minnesota Portfolio | Ab Municipal vs. Ab All Market |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |