Correlation Between IShares National and AB Active
Can any of the company-specific risk be diversified away by investing in both IShares National and AB Active 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 IShares National and AB Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares National Muni and AB Active ETFs,, you can compare the effects of market volatilities on IShares National and AB Active 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 IShares National with a short position of AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares National and AB Active.
Diversification Opportunities for IShares National and AB Active
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and TAFM is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares National Muni and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, and IShares National 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 iShares National Muni are associated (or correlated) with AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of IShares National i.e., IShares National and AB Active go up and down completely randomly.
Pair Corralation between IShares National and AB Active
Considering the 90-day investment horizon iShares National Muni is expected to generate 0.84 times more return on investment than AB Active. However, iShares National Muni is 1.19 times less risky than AB Active. It trades about 0.14 of its potential returns per unit of risk. AB Active ETFs, is currently generating about 0.09 per unit of risk. If you would invest 10,682 in iShares National Muni on August 29, 2024 and sell it today you would earn a total of 127.00 from holding iShares National Muni or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares National Muni vs. AB Active ETFs,
Performance |
| Timeline |
| iShares National Muni |
| AB Active ETFs, |
IShares National and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares National and AB Active
The main advantage of trading using opposite IShares National and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares National position performs unexpectedly, AB Active 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 Active will offset losses from the drop in AB Active's long position.| IShares National vs. iShares JP Morgan | IShares National vs. iShares iBoxx Investment | IShares National vs. SPDR Nuveen Bloomberg | IShares National vs. VanEck High Yield |
| AB Active vs. SSGA Active Trust | AB Active vs. SPDR Nuveen Municipal | AB Active vs. Xtrackers California Municipal | AB Active vs. iShares Short Maturity |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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