Correlation Between American High and Tax-exempt Fund
Can any of the company-specific risk be diversified away by investing in both American High and Tax-exempt Fund 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 American High and Tax-exempt Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Tax Exempt Fund Of, you can compare the effects of market volatilities on American High and Tax-exempt Fund 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 American High with a short position of Tax-exempt Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High and Tax-exempt Fund.
Diversification Opportunities for American High and Tax-exempt Fund
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Tax-exempt is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Tax Exempt Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Fund and American High 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 American High Income Municipal are associated (or correlated) with Tax-exempt Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Fund has no effect on the direction of American High i.e., American High and Tax-exempt Fund go up and down completely randomly.
Pair Corralation between American High and Tax-exempt Fund
Assuming the 90 days horizon American High Income Municipal is expected to generate 1.07 times more return on investment than Tax-exempt Fund. However, American High is 1.07 times more volatile than Tax Exempt Fund Of. It trades about 0.03 of its potential returns per unit of risk. Tax Exempt Fund Of is currently generating about 0.0 per unit of risk. If you would invest 1,516 in American High Income Municipal on October 20, 2024 and sell it today you would earn a total of 2.00 from holding American High Income Municipal or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Tax Exempt Fund Of
Performance |
| Timeline |
| American High Income |
| Tax Exempt Fund |
American High and Tax-exempt Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High and Tax-exempt Fund
The main advantage of trading using opposite American High and Tax-exempt Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High position performs unexpectedly, Tax-exempt Fund 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 Tax-exempt Fund will offset losses from the drop in Tax-exempt Fund's long position.| American High vs. Tax Exempt Bond | American High vs. American High Income Municipal | American High vs. American High Income | American High vs. Bond Fund Of |
| Tax-exempt Fund vs. Tax Exempt Fund Of | Tax-exempt Fund vs. American High Income Municipal | Tax-exempt Fund vs. California Intermediate Term Tax Free | Tax-exempt Fund vs. Capital World Bond |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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