Correlation Between Inflation-protected and Ab Bond
Can any of the company-specific risk be diversified away by investing in both Inflation-protected 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 Inflation-protected and Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Ab Bond Inflation, you can compare the effects of market volatilities on Inflation-protected 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 Inflation-protected with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Ab Bond.
Diversification Opportunities for Inflation-protected and Ab Bond
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inflation-protected and ANBIX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund 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 Inflation-protected 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 Inflation Protected Bond Fund 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 Inflation-protected i.e., Inflation-protected and Ab Bond go up and down completely randomly.
Pair Corralation between Inflation-protected and Ab Bond
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to under-perform the Ab Bond. In addition to that, Inflation-protected is 3.33 times more volatile than Ab Bond Inflation. It trades about -0.24 of its total potential returns per unit of risk. Ab Bond Inflation is currently generating about -0.25 per unit of volatility. If you would invest 1,028 in Ab Bond Inflation on October 11, 2024 and sell it today you would lose (10.00) from holding Ab Bond Inflation or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Ab Bond Inflation
Performance |
| Timeline |
| Inflation Protected |
| Ab Bond Inflation |
Inflation-protected and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation-protected and Ab Bond
The main advantage of trading using opposite Inflation-protected and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected 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.| Inflation-protected vs. Wells Fargo Diversified | Inflation-protected vs. Small Cap Stock | Inflation-protected vs. Fulcrum Diversified Absolute | Inflation-protected vs. Allianzgi Diversified Income |
| Ab Bond vs. Lord Abbett Health | Ab Bond vs. Blackrock Health Sciences | Ab Bond vs. Alphacentric Lifesci Healthcare | Ab Bond vs. Tekla Healthcare Investors |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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