Correlation Between AB Active and VanEck Intermediate
Can any of the company-specific risk be diversified away by investing in both AB Active and VanEck Intermediate 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 AB Active and VanEck Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Active ETFs, and VanEck Intermediate Muni, you can compare the effects of market volatilities on AB Active and VanEck Intermediate 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 AB Active with a short position of VanEck Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Active and VanEck Intermediate.
Diversification Opportunities for AB Active and VanEck Intermediate
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TAFL and VanEck is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding AB Active ETFs, and VanEck Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Intermediate Muni and AB Active 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 AB Active ETFs, are associated (or correlated) with VanEck Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Intermediate Muni has no effect on the direction of AB Active i.e., AB Active and VanEck Intermediate go up and down completely randomly.
Pair Corralation between AB Active and VanEck Intermediate
Given the investment horizon of 90 days AB Active ETFs, is expected to generate 1.19 times more return on investment than VanEck Intermediate. However, AB Active is 1.19 times more volatile than VanEck Intermediate Muni. It trades about 0.17 of its potential returns per unit of risk. VanEck Intermediate Muni is currently generating about 0.16 per unit of risk. If you would invest 2,536 in AB Active ETFs, on September 3, 2024 and sell it today you would earn a total of 39.00 from holding AB Active ETFs, or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Active ETFs, vs. VanEck Intermediate Muni
Performance |
| Timeline |
| AB Active ETFs, |
| VanEck Intermediate Muni |
AB Active and VanEck Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Active and VanEck Intermediate
The main advantage of trading using opposite AB Active and VanEck Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Active position performs unexpectedly, VanEck Intermediate 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 VanEck Intermediate will offset losses from the drop in VanEck Intermediate's long position.| AB Active vs. SSGA Active Trust | AB Active vs. SPDR Nuveen Municipal | AB Active vs. iShares Short Maturity | AB Active vs. First Trust Flexible |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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