Correlation Between Nebraska Municipal and Ab Select
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal and Ab Select 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 Nebraska Municipal and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nebraska Municipal Fund and Ab Select Longshort, you can compare the effects of market volatilities on Nebraska Municipal and Ab Select 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 Nebraska Municipal with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and Ab Select.
Diversification Opportunities for Nebraska Municipal and Ab Select
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nebraska and ASCLX is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort and Nebraska 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 Nebraska Municipal Fund are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Nebraska Municipal i.e., Nebraska Municipal and Ab Select go up and down completely randomly.
Pair Corralation between Nebraska Municipal and Ab Select
Assuming the 90 days horizon Nebraska Municipal Fund is expected to under-perform the Ab Select. In addition to that, Nebraska Municipal is 1.44 times more volatile than Ab Select Longshort. It trades about -0.09 of its total potential returns per unit of risk. Ab Select Longshort is currently generating about -0.08 per unit of volatility. If you would invest 1,275 in Ab Select Longshort on January 13, 2025 and sell it today you would lose (21.00) from holding Ab Select Longshort or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nebraska Municipal Fund vs. Ab Select Longshort
Performance |
| Timeline |
| Nebraska Municipal |
| Ab Select Longshort |
Nebraska Municipal and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and Ab Select
The main advantage of trading using opposite Nebraska Municipal and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal position performs unexpectedly, Ab Select 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 Select will offset losses from the drop in Ab Select's long position.| Nebraska Municipal vs. Viking Tax Free Fund | Nebraska Municipal vs. Viking Tax Free Fund | Nebraska Municipal vs. Viking Tax Free Fund | Nebraska Municipal vs. Integrity Dividend Summit |
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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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