Correlation Between Aig Government and Tax Exempt
Can any of the company-specific risk be diversified away by investing in both Aig Government and Tax Exempt 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 Aig Government and Tax Exempt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Tax Exempt Bond, you can compare the effects of market volatilities on Aig Government and Tax Exempt 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 Aig Government with a short position of Tax Exempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Tax Exempt.
Diversification Opportunities for Aig Government and Tax Exempt
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aig and Tax is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Tax Exempt Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Bond and Aig Government 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 Aig Government Money are associated (or correlated) with Tax Exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Bond has no effect on the direction of Aig Government i.e., Aig Government and Tax Exempt go up and down completely randomly.
Pair Corralation between Aig Government and Tax Exempt
Assuming the 90 days horizon Aig Government is expected to generate 1.83 times less return on investment than Tax Exempt. But when comparing it to its historical volatility, Aig Government Money is 1.17 times less risky than Tax Exempt. It trades about 0.05 of its potential returns per unit of risk. Tax Exempt Bond is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,144 in Tax Exempt Bond on September 14, 2024 and sell it today you would earn a total of 109.00 from holding Tax Exempt Bond or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Tax Exempt Bond
Performance |
| Timeline |
| Aig Government Money |
| Tax Exempt Bond |
Aig Government and Tax Exempt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Tax Exempt
The main advantage of trading using opposite Aig Government and Tax Exempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Tax Exempt 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 Tax Exempt will offset losses from the drop in Tax Exempt's long position.| Aig Government vs. Simt Multi Asset Accumulation | Aig Government vs. Saat Market Growth | Aig Government vs. Simt Real Return | Aig Government vs. Simt Small Cap |
| Tax Exempt vs. Vy Goldman Sachs | Tax Exempt vs. Precious Metals And | Tax Exempt vs. Gabelli Gold Fund | Tax Exempt vs. Invesco Gold Special |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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