Correlation Between Ab Bond and Selected American
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Selected American 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 Selected American 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 Selected American Shares, you can compare the effects of market volatilities on Ab Bond and Selected American 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 Selected American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Selected American.
Diversification Opportunities for Ab Bond and Selected American
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ABNTX and Selected is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares 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 Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of Ab Bond i.e., Ab Bond and Selected American go up and down completely randomly.
Pair Corralation between Ab Bond and Selected American
Assuming the 90 days horizon Ab Bond is expected to generate 2.22 times less return on investment than Selected American. But when comparing it to its historical volatility, Ab Bond Inflation is 5.0 times less risky than Selected American. It trades about 0.36 of its potential returns per unit of risk. Selected American Shares is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,664 in Selected American Shares on June 6, 2025 and sell it today you would earn a total of 278.00 from holding Selected American Shares or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Ab Bond Inflation vs. Selected American Shares
Performance |
| Timeline |
| Ab Bond Inflation |
| Selected American Shares |
Ab Bond and Selected American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Selected American
The main advantage of trading using opposite Ab Bond and Selected American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Selected American 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 Selected American will offset losses from the drop in Selected American's long position.| Ab Bond vs. Pace Smallmedium Value | Ab Bond vs. Ultrasmall Cap Profund Ultrasmall Cap | Ab Bond vs. Queens Road Small | Ab Bond vs. Fpa Queens Road |
| Selected American vs. Hartford Emerging Markets | Selected American vs. Pace International Emerging | Selected American vs. Western Assets Emerging | Selected American vs. Balanced Strategy Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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