Correlation Between Ab Municipal and Touchstone International
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Touchstone International 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 Municipal and Touchstone International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Income and Touchstone International Equity, you can compare the effects of market volatilities on Ab Municipal and Touchstone International 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 Municipal with a short position of Touchstone International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Touchstone International.
Diversification Opportunities for Ab Municipal and Touchstone International
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MISHX and Touchstone is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Income and Touchstone International Equit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone International and Ab Municipal 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 Municipal Income are associated (or correlated) with Touchstone International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone International has no effect on the direction of Ab Municipal i.e., Ab Municipal and Touchstone International go up and down completely randomly.
Pair Corralation between Ab Municipal and Touchstone International
Assuming the 90 days horizon Ab Municipal Income is expected to generate 0.39 times more return on investment than Touchstone International. However, Ab Municipal Income is 2.57 times less risky than Touchstone International. It trades about 0.17 of its potential returns per unit of risk. Touchstone International Equity is currently generating about -0.14 per unit of risk. If you would invest 1,126 in Ab Municipal Income on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Ab Municipal Income or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Income vs. Touchstone International Equit
Performance |
| Timeline |
| Ab Municipal Income |
| Touchstone International |
Ab Municipal and Touchstone International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Touchstone International
The main advantage of trading using opposite Ab Municipal and Touchstone International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Touchstone International 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 Touchstone International will offset losses from the drop in Touchstone International's long position.| Ab Municipal vs. T Rowe Price | Ab Municipal vs. Rbb Fund | Ab Municipal vs. Rbc Microcap Value | Ab Municipal vs. Fabxx |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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