Correlation Between Ab Bond and Simt Multi-asset

Can any of the company-specific risk be diversified away by investing in both Ab Bond and Simt Multi-asset 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 Bond and Simt Multi-asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ab Bond Inflation and Simt Multi Asset Inflation, you can compare the effects of market volatilities on Ab Bond and Simt Multi-asset 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 Bond with a short position of Simt Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Simt Multi-asset.

Diversification Opportunities for Ab Bond and Simt Multi-asset

0.87

Correlation Coefficient

Ab Bond  Simt Multi-asset

Very poor diversification

The 3 months correlation between ANBIX and Simt is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Simt Multi Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Multi Asset and Ab Bond 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 Bond Inflation are associated (or correlated) with Simt Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Multi Asset has no effect on the direction of Ab Bond i.e., Ab Bond and Simt Multi-asset go up and down completely randomly.

Pair Corralation between Ab Bond and Simt Multi-asset

Assuming the 90 days horizon Ab Bond Inflation is expected to generate 1.04 times more return on investment than Simt Multi-asset. However, Ab Bond is 1.04 times more volatile than Simt Multi Asset Inflation. It trades about 0.08 of its potential returns per unit of risk. Simt Multi Asset Inflation is currently generating about 0.08 per unit of risk. If you would invest  946.00  in Ab Bond Inflation on December 3, 2024 and sell it today you would earn a total of  99.00  from holding Ab Bond Inflation or generate 10.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ab Bond Inflation  vs.  Simt Multi Asset Inflation

Ab Bond Inflation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Bond Inflation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Multi Asset

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Multi Asset Inflation are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Multi-asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Bond and Simt Multi-asset

The main advantage of trading using opposite Ab Bond and Simt Multi-asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Simt Multi-asset 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 Simt Multi-asset will offset losses from the drop in Simt Multi-asset's long position.

The idea behind Ab Bond Inflation and Simt Multi Asset Inflation 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.