Correlation Between Large Cap and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Large Cap 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 Large Cap and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Value and Ab Municipal Bond, you can compare the effects of market volatilities on Large Cap 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 Large Cap with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Ab Municipal.
Diversification Opportunities for Large Cap and Ab Municipal
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Large and AUNTX is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Value and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond and Large Cap 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 Large Cap Value 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 Bond has no effect on the direction of Large Cap i.e., Large Cap and Ab Municipal go up and down completely randomly.
Pair Corralation between Large Cap and Ab Municipal
Assuming the 90 days horizon Large Cap Value is expected to generate 5.87 times more return on investment than Ab Municipal. However, Large Cap is 5.87 times more volatile than Ab Municipal Bond. It trades about 0.05 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.21 per unit of risk. If you would invest 2,840 in Large Cap Value on August 29, 2024 and sell it today you would earn a total of 32.00 from holding Large Cap Value or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Large Cap Value vs. Ab Municipal Bond
Performance |
| Timeline |
| Large Cap Value |
| Ab Municipal Bond |
Large Cap and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Ab Municipal
The main advantage of trading using opposite Large Cap and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap 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.| Large Cap vs. Ab Municipal Bond | Large Cap vs. Ab Bond Inflation | Large Cap vs. The Hartford Inflation | Large Cap vs. Lord Abbett Inflation |
| Ab Municipal vs. Vanguard Limited Term Tax Exempt | Ab Municipal vs. HUMANA INC | Ab Municipal vs. Aquagold International | Ab Municipal vs. Barloworld Ltd ADR |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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