Correlation Between High Yield and The National
Can any of the company-specific risk be diversified away by investing in both High Yield and The National 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 and The National 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 The National Tax Free, you can compare the effects of market volatilities on High Yield and The National 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 with a short position of The National. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and The National.
Diversification Opportunities for High Yield and The National
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between High and The is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and The National Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Tax and High Yield 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 The National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Tax has no effect on the direction of High Yield i.e., High Yield and The National go up and down completely randomly.
Pair Corralation between High Yield and The National
Assuming the 90 days horizon High Yield Municipal Fund is expected to under-perform the The National. In addition to that, High Yield is 1.34 times more volatile than The National Tax Free. It trades about -0.36 of its total potential returns per unit of risk. The National Tax Free is currently generating about -0.32 per unit of volatility. If you would invest 1,885 in The National Tax Free on October 8, 2024 and sell it today you would lose (25.00) from holding The National Tax Free or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. The National Tax Free
Performance |
| Timeline |
| High Yield Municipal |
| National Tax |
High Yield and The National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and The National
The main advantage of trading using opposite High Yield and The National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, The National 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 The National will offset losses from the drop in The National's long position.| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
| The National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |