Correlation Between Ab Municipal and Mutual Of

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

Diversification Opportunities for Ab Municipal and Mutual Of

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between AUNTX and Mutual is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Mutual Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Of America and Ab Municipal 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 Municipal Bond are associated (or correlated) with Mutual Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Of America has no effect on the direction of Ab Municipal i.e., Ab Municipal and Mutual Of go up and down completely randomly.

Pair Corralation between Ab Municipal and Mutual Of

Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.71 times more return on investment than Mutual Of. However, Ab Municipal Bond is 1.41 times less risky than Mutual Of. It trades about 0.07 of its potential returns per unit of risk. Mutual Of America is currently generating about 0.04 per unit of risk. If you would invest  1,042  in Ab Municipal Bond on October 9, 2024 and sell it today you would earn a total of  26.00  from holding Ab Municipal Bond or generate 2.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ab Municipal Bond  vs.  Mutual Of America

 Performance 
       Timeline  
Ab Municipal Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ab Municipal Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mutual Of America 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mutual Of America has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Mutual Of is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Municipal and Mutual Of Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab Municipal and Mutual Of

The main advantage of trading using opposite Ab Municipal and Mutual Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Mutual Of 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 Mutual Of will offset losses from the drop in Mutual Of's long position.
The idea behind Ab Municipal Bond and Mutual Of America 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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