Correlation Between Pace Municipal and Ab Bond
Can any of the company-specific risk be diversified away by investing in both Pace Municipal 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 Pace Municipal and Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Ab Bond Inflation, you can compare the effects of market volatilities on Pace Municipal 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 Pace Municipal with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Ab Bond.
Diversification Opportunities for Pace Municipal and Ab Bond
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and ABNCX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed 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 Pace 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 Pace Municipal Fixed 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 Pace Municipal i.e., Pace Municipal and Ab Bond go up and down completely randomly.
Pair Corralation between Pace Municipal and Ab Bond
Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 1.79 times more return on investment than Ab Bond. However, Pace Municipal is 1.79 times more volatile than Ab Bond Inflation. It trades about 0.17 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.16 per unit of risk. If you would invest 1,217 in Pace Municipal Fixed on September 4, 2024 and sell it today you would earn a total of 11.00 from holding Pace Municipal Fixed or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Ab Bond Inflation
Performance |
| Timeline |
| Pace Municipal Fixed |
| Ab Bond Inflation |
Pace Municipal and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Ab Bond
The main advantage of trading using opposite Pace Municipal and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal 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.| Pace Municipal vs. Ab Small Cap | Pace Municipal vs. T Rowe Price | Pace Municipal vs. Nasdaq 100 Fund Class | Pace Municipal vs. Omni Small Cap Value |
| Ab Bond vs. Msift High Yield | Ab Bond vs. American Century High | Ab Bond vs. Prudential High Yield | Ab Bond vs. Pioneer 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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