Correlation Between First Investors and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both First Investors 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 First Investors and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Investors Tax and Ab Municipal Bond, you can compare the effects of market volatilities on First Investors 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 First Investors with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Ab Municipal.
Diversification Opportunities for First Investors and Ab Municipal
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and AUNTX is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Tax 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 First Investors 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 First Investors Tax 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 First Investors i.e., First Investors and Ab Municipal go up and down completely randomly.
Pair Corralation between First Investors and Ab Municipal
Assuming the 90 days horizon First Investors Tax is expected to generate 2.7 times more return on investment than Ab Municipal. However, First Investors is 2.7 times more volatile than Ab Municipal Bond. It trades about 0.17 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.23 per unit of risk. If you would invest 1,234 in First Investors Tax on September 1, 2024 and sell it today you would earn a total of 19.00 from holding First Investors Tax or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Investors Tax vs. Ab Municipal Bond
Performance |
| Timeline |
| First Investors Tax |
| Ab Municipal Bond |
First Investors and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Investors and Ab Municipal
The main advantage of trading using opposite First Investors and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Investors 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.| First Investors vs. Optimum Small Mid Cap | First Investors vs. Optimum Small Mid Cap | First Investors vs. Ivy Apollo Multi Asset | First Investors vs. Optimum Fixed Income |
| Ab Municipal vs. Tiaa Cref Real Estate | Ab Municipal vs. Jhancock Real Estate | Ab Municipal vs. Msif Real Estate | Ab Municipal vs. Prudential Real Estate |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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