Correlation Between High-yield Municipal and Barloworld
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Barloworld 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 High-yield Municipal and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Barloworld Ltd ADR, you can compare the effects of market volatilities on High-yield Municipal and Barloworld 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 High-yield Municipal with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Barloworld.
Diversification Opportunities for High-yield Municipal and Barloworld
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between High-yield and Barloworld is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and High-yield 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 High Yield Municipal Fund are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Barloworld go up and down completely randomly.
Pair Corralation between High-yield Municipal and Barloworld
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.08 times more return on investment than Barloworld. However, High Yield Municipal Fund is 12.24 times less risky than Barloworld. It trades about 0.14 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about -0.01 per unit of risk. If you would invest 855.00 in High Yield Municipal Fund on August 23, 2024 and sell it today you would earn a total of 41.00 from holding High Yield Municipal Fund or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Barloworld Ltd ADR
Performance |
| Timeline |
| High Yield Municipal |
| Barloworld ADR |
High-yield Municipal and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Barloworld
The main advantage of trading using opposite High-yield Municipal and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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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