Correlation Between Federated Ohio and Ab Bond
Can any of the company-specific risk be diversified away by investing in both Federated Ohio and Ab Bond 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 Federated Ohio and Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Ohio Municipal and Ab Bond Inflation, you can compare the effects of market volatilities on Federated Ohio and Ab Bond 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 Federated Ohio with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ohio and Ab Bond.
Diversification Opportunities for Federated Ohio and Ab Bond
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and ABNTX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ohio Municipal and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation and Federated Ohio 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 Federated Ohio Municipal are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of Federated Ohio i.e., Federated Ohio and Ab Bond go up and down completely randomly.
Pair Corralation between Federated Ohio and Ab Bond
Assuming the 90 days horizon Federated Ohio is expected to generate 1.25 times less return on investment than Ab Bond. But when comparing it to its historical volatility, Federated Ohio Municipal is 1.25 times less risky than Ab Bond. It trades about 0.06 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 934.00 in Ab Bond Inflation on September 3, 2024 and sell it today you would earn a total of 84.00 from holding Ab Bond Inflation or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ohio Municipal vs. Ab Bond Inflation
Performance |
| Timeline |
| Federated Ohio Municipal |
| Ab Bond Inflation |
Federated Ohio and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ohio and Ab Bond
The main advantage of trading using opposite Federated Ohio and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ohio position performs unexpectedly, Ab Bond 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 Bond will offset losses from the drop in Ab Bond's long position.| Federated Ohio vs. Gmo Resources | Federated Ohio vs. Fidelity Advisor Energy | Federated Ohio vs. Calvert Global Energy | Federated Ohio vs. Energy Basic Materials |
| Ab Bond vs. Blackrock High Yield | Ab Bond vs. Pgim High Yield | Ab Bond vs. Goldman Sachs High | Ab Bond vs. Gmo High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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