Correlation Between Ab Global and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and Ab Municipal Bond, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Ab Municipal.
Diversification Opportunities for Ab Global and Ab Municipal
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GCEYX and AUNCX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E 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 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 E 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 Ab Global i.e., Ab Global and Ab Municipal go up and down completely randomly.
Pair Corralation between Ab Global and Ab Municipal
Assuming the 90 days horizon Ab Global E is expected to generate 4.23 times more return on investment than Ab Municipal. However, Ab Global is 4.23 times more volatile than Ab Municipal Bond. It trades about 0.12 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.18 per unit of risk. If you would invest 1,769 in Ab Global E on September 2, 2024 and sell it today you would earn a total of 27.00 from holding Ab Global E or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global E vs. Ab Municipal Bond
Performance |
| Timeline |
| Ab Global E |
| Ab Municipal Bond |
Ab Global and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Ab Municipal
The main advantage of trading using opposite Ab Global and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.| Ab Global vs. Lord Abbett Govt | Ab Global vs. T Rowe Price | Ab Global vs. Pimco Funds | Ab Global vs. Meeder Funds |
| Ab Municipal vs. Columbia Vertible Securities | Ab Municipal vs. Advent Claymore Convertible | Ab Municipal vs. Putnam Convertible Incm Gwth | Ab Municipal vs. Absolute Convertible Arbitrage |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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