Correlation Between Ab All and Short-term Municipal

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Can any of the company-specific risk be diversified away by investing in both Ab All and Short-term 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 Ab All and Short-term Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab All Market and Short Term Municipal Bond, you can compare the effects of market volatilities on Ab All and Short-term 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 Ab All with a short position of Short-term Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab All and Short-term Municipal.

Diversification Opportunities for Ab All and Short-term Municipal

AMTOXShort-termDiversified AwayAMTOXShort-termDiversified Away100%
0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between AMTOX and Short-term is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ab All Market and Short Term Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Municipal and Ab All 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 All Market are associated (or correlated) with Short-term Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Municipal has no effect on the direction of Ab All i.e., Ab All and Short-term Municipal go up and down completely randomly.

Pair Corralation between Ab All and Short-term Municipal

Assuming the 90 days horizon Ab All Market is expected to under-perform the Short-term Municipal. In addition to that, Ab All is 5.79 times more volatile than Short Term Municipal Bond. It trades about -0.01 of its total potential returns per unit of risk. Short Term Municipal Bond is currently generating about 0.08 per unit of volatility. If you would invest  963.00  in Short Term Municipal Bond on October 25, 2024 and sell it today you would earn a total of  5.00  from holding Short Term Municipal Bond or generate 0.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.33%
ValuesDaily Returns

Ab All Market  vs.  Short Term Municipal Bond

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -5-4-3-2-10
JavaScript chart by amCharts 3.21.15AMTOX WSBIX
       Timeline  
Ab All Market 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ab All Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab All is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan8.68.78.88.999.1
Short Term Municipal 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Municipal Bond are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short-term Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan9.629.639.649.659.669.679.689.699.79.71

Ab All and Short-term Municipal Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.94-0.67-0.4-0.13-0.0080650.09520.350.620.891.16 5101520253035
JavaScript chart by amCharts 3.21.15AMTOX WSBIX
       Returns  

Pair Trading with Ab All and Short-term Municipal

The main advantage of trading using opposite Ab All and Short-term Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab All position performs unexpectedly, Short-term 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 Short-term Municipal will offset losses from the drop in Short-term Municipal's long position.
The idea behind Ab All Market and Short Term Municipal Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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