Correlation Between Qs Us and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Qs Us 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 Qs Us and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Small Capitalization and Ab Municipal Bond, you can compare the effects of market volatilities on Qs Us 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 Qs Us with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Us and Ab Municipal.
Diversification Opportunities for Qs Us and Ab Municipal
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LMBMX and AUNTX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Qs Small Capitalization 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 Qs Us 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 Qs Small Capitalization 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 Qs Us i.e., Qs Us and Ab Municipal go up and down completely randomly.
Pair Corralation between Qs Us and Ab Municipal
Assuming the 90 days horizon Qs Small Capitalization is expected to generate 9.38 times more return on investment than Ab Municipal. However, Qs Us is 9.38 times more volatile than Ab Municipal Bond. It trades about 0.1 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.12 per unit of risk. If you would invest 1,284 in Qs Small Capitalization on September 2, 2024 and sell it today you would earn a total of 224.00 from holding Qs Small Capitalization or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qs Small Capitalization vs. Ab Municipal Bond
Performance |
| Timeline |
| Qs Small Capitalization |
| Ab Municipal Bond |
Qs Us and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Us and Ab Municipal
The main advantage of trading using opposite Qs Us and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Us 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.| Qs Us vs. Clearbridge Aggressive Growth | Qs Us vs. Clearbridge Small Cap | Qs Us vs. Qs International Equity | Qs Us vs. Clearbridge Appreciation Fund |
| Ab Municipal vs. Us Government Securities | Ab Municipal vs. Government Securities Fund | Ab Municipal vs. John Hancock Government | Ab Municipal vs. Us Government Securities |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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