Correlation Between Aig Government and Wilmington Municipal
Can any of the company-specific risk be diversified away by investing in both Aig Government and Wilmington 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 Aig Government and Wilmington Municipal 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 Wilmington Municipal Bond, you can compare the effects of market volatilities on Aig Government and Wilmington 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 Aig Government with a short position of Wilmington Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Wilmington Municipal.
Diversification Opportunities for Aig Government and Wilmington Municipal
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aig and Wilmington is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Wilmington Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Municipal 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 Wilmington Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Municipal Bond has no effect on the direction of Aig Government i.e., Aig Government and Wilmington Municipal go up and down completely randomly.
Pair Corralation between Aig Government and Wilmington Municipal
Assuming the 90 days horizon Aig Government is expected to generate 2.79 times less return on investment than Wilmington Municipal. In addition to that, Aig Government is 1.05 times more volatile than Wilmington Municipal Bond. It trades about 0.02 of its total potential returns per unit of risk. Wilmington Municipal Bond is currently generating about 0.06 per unit of volatility. If you would invest 1,214 in Wilmington Municipal Bond on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Wilmington Municipal Bond or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Aig Government Money vs. Wilmington Municipal Bond
Performance |
| Timeline |
| Aig Government Money |
| Wilmington Municipal Bond |
Aig Government and Wilmington Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Wilmington Municipal
The main advantage of trading using opposite Aig Government and Wilmington Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Wilmington 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 Wilmington Municipal will offset losses from the drop in Wilmington Municipal's long position.| Aig Government vs. Prudential Health Sciences | Aig Government vs. Health Biotchnology Portfolio | Aig Government vs. Baillie Gifford Health | Aig Government vs. Baron Health Care |
| Wilmington Municipal vs. Wilmington Global Alpha | Wilmington Municipal vs. Wilmington Global Alpha | Wilmington Municipal vs. Wilmington Broad Market | Wilmington Municipal vs. Wilmington Municipal Bond |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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