Correlation Between Pace Municipal and Ab Global
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Ab Global 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 Global 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 Global E, you can compare the effects of market volatilities on Pace Municipal and Ab Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Ab Global.
Diversification Opportunities for Pace Municipal and Ab Global
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PACE and GCEAX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Ab Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global E 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global E has no effect on the direction of Pace Municipal i.e., Pace Municipal and Ab Global go up and down completely randomly.
Pair Corralation between Pace Municipal and Ab Global
Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 0.37 times more return on investment than Ab Global. However, Pace Municipal Fixed is 2.74 times less risky than Ab Global. It trades about 0.12 of its potential returns per unit of risk. Ab Global E is currently generating about -0.05 per unit of risk. If you would invest 1,212 in Pace Municipal Fixed on August 24, 2024 and sell it today you would earn a total of 8.00 from holding Pace Municipal Fixed or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Ab Global E
Performance |
| Timeline |
| Pace Municipal Fixed |
| Ab Global E |
Pace Municipal and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Ab Global
The main advantage of trading using opposite Pace Municipal and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Ab Global 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 Global will offset losses from the drop in Ab Global's long position.| Pace Municipal vs. Vanguard Intermediate Term Tax Exempt | Pace Municipal vs. Vanguard Intermediate Term Tax Exempt | Pace Municipal vs. Tax Exempt Bond | Pace Municipal vs. Tax Exempt Bond |
| Ab Global vs. Nuveen Minnesota Municipal | Ab Global vs. Georgia Tax Free Bond | Ab Global vs. Transamerica Intermediate Muni | Ab Global vs. Pace Municipal Fixed |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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