Correlation Between NYSE Composite and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Ab Municipal Income, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Ab Municipal.
Diversification Opportunities for NYSE Composite and Ab Municipal
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and MISHX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ab Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Income and NYSE Composite 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 NYSE Composite 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 Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ab Municipal go up and down completely randomly.
Pair Corralation between NYSE Composite and Ab Municipal
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.64 times more return on investment than Ab Municipal. However, NYSE Composite is 2.64 times more volatile than Ab Municipal Income. It trades about 0.21 of its potential returns per unit of risk. Ab Municipal Income is currently generating about 0.02 per unit of risk. If you would invest 1,911,944 in NYSE Composite on October 21, 2024 and sell it today you would earn a total of 48,793 from holding NYSE Composite or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Ab Municipal Income
Performance |
| Timeline |
NYSE Composite and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Ab Municipal Income
Pair trading matchups for Ab Municipal
Pair Trading with NYSE Composite and Ab Municipal
The main advantage of trading using opposite NYSE Composite and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. National Health Investors | NYSE Composite vs. Arbor Realty Trust | NYSE Composite vs. Canaf Investments | NYSE Composite vs. Freedom Holding Corp |
| Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Minnesota Portfolio |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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