Correlation Between The Bond and Ab New

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

By analyzing existing cross correlation between The Bond Fund and Ab New Jersey, you can compare the effects of market volatilities on The Bond and Ab New 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 The Bond with a short position of Ab New. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Bond and Ab New.

Diversification Opportunities for The Bond and Ab New

0.89

Correlation Coefficient

The Bond  Ab New

Very poor diversification

The 3 months correlation between The and ANJCX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Bond Fund and Ab New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab New Jersey and The 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 The Bond Fund are associated (or correlated) with Ab New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab New Jersey has no effect on the direction of The Bond i.e., The Bond and Ab New go up and down completely randomly.

Pair Corralation between The Bond and Ab New

Assuming the 90 days horizon The Bond Fund is expected to under-perform the Ab New. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Bond Fund is 1.02 times less risky than Ab New. The mutual fund trades about -0.49 of its potential returns per unit of risk. The Ab New Jersey is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest  929.00  in Ab New Jersey on October 7, 2024 and sell it today you would lose (16.00) from holding Ab New Jersey or give up 1.72% of portfolio value over 90 days.

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

The Bond Fund  vs.  Ab New Jersey

Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ab New Jersey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab New Jersey has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ab New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Bond and Ab New

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

The idea behind The Bond Fund and Ab New Jersey 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.