Correlation Between Ab Bond and Us Government
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Ab Bond and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Us Government.
Diversification Opportunities for Ab Bond and Us Government
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ANBIX and UGSDX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Ab Bond i.e., Ab Bond and Us Government go up and down completely randomly.
Pair Corralation between Ab Bond and Us Government
Assuming the 90 days horizon Ab Bond Inflation is expected to generate 2.45 times more return on investment than Us Government. However, Ab Bond is 2.45 times more volatile than Us Government Securities. It trades about 0.25 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.13 per unit of risk. If you would invest 1,032 in Ab Bond Inflation on May 30, 2025 and sell it today you would earn a total of 26.00 from holding Ab Bond Inflation or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Us Government Securities
Performance |
| Timeline |
| Ab Bond Inflation |
| Us Government Securities |
Ab Bond and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Us Government
The main advantage of trading using opposite Ab Bond and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Ab Bond vs. Vanguard Financials Index | Ab Bond vs. Icon Financial Fund | Ab Bond vs. Financial Industries Fund | Ab Bond vs. Prudential Financial Services |
| Us Government vs. Fidelity Advisor Technology | Us Government vs. Goldman Sachs Technology | Us Government vs. Vanguard Information Technology | Us Government vs. Franklin Biotechnology Discovery |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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