Correlation Between Emerging Markets and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Emerging Markets 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 Emerging Markets and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Targeted and Ab Municipal Bond, you can compare the effects of market volatilities on Emerging Markets 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 Emerging Markets with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Ab Municipal.
Diversification Opportunities for Emerging Markets and Ab Municipal
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerging and AUNYX is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Targeted 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 Emerging Markets 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 Emerging Markets Targeted 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 Emerging Markets i.e., Emerging Markets and Ab Municipal go up and down completely randomly.
Pair Corralation between Emerging Markets and Ab Municipal
Assuming the 90 days horizon Emerging Markets Targeted is expected to under-perform the Ab Municipal. In addition to that, Emerging Markets is 5.19 times more volatile than Ab Municipal Bond. It trades about -0.12 of its total potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.25 per unit of volatility. If you would invest 1,072 in Ab Municipal Bond on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Ab Municipal Bond or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Targeted vs. Ab Municipal Bond
Performance |
| Timeline |
| Emerging Markets Targeted |
| Ab Municipal Bond |
Emerging Markets and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Ab Municipal
The main advantage of trading using opposite Emerging Markets and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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.| Emerging Markets vs. Aqr Managed Futures | Emerging Markets vs. Oklahoma College Savings | Emerging Markets vs. The Hartford Inflation | Emerging Markets vs. Ab Bond Inflation |
| Ab Municipal vs. Touchstone Large Cap | Ab Municipal vs. Qs Large Cap | Ab Municipal vs. Qs Large Cap | Ab Municipal vs. Transamerica Large Cap |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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