Correlation Between High-yield Municipal and Commonwealth Japan
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Commonwealth Japan 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 Commonwealth Japan 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 Commonwealth Japan Fund, you can compare the effects of market volatilities on High-yield Municipal and Commonwealth Japan 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 Commonwealth Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Commonwealth Japan.
Diversification Opportunities for High-yield Municipal and Commonwealth Japan
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High-yield and Commonwealth is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Commonwealth Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Japan 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 Commonwealth Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Japan has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Commonwealth Japan go up and down completely randomly.
Pair Corralation between High-yield Municipal and Commonwealth Japan
Assuming the 90 days horizon High-yield Municipal is expected to generate 2.18 times less return on investment than Commonwealth Japan. But when comparing it to its historical volatility, High Yield Municipal Fund is 2.81 times less risky than Commonwealth Japan. It trades about 0.14 of its potential returns per unit of risk. Commonwealth Japan Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 379.00 in Commonwealth Japan Fund on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Commonwealth Japan Fund or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Commonwealth Japan Fund
Performance |
| Timeline |
| High Yield Municipal |
| Commonwealth Japan |
High-yield Municipal and Commonwealth Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Commonwealth Japan
The main advantage of trading using opposite High-yield Municipal and Commonwealth Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Commonwealth Japan 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 Commonwealth Japan will offset losses from the drop in Commonwealth Japan'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 |
| Commonwealth Japan vs. Commonwealth Australianew Zealand | Commonwealth Japan vs. Lazard Emerging Markets | Commonwealth Japan vs. ATLANTIC PETROLPF DK | Commonwealth Japan vs. Ashmore Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |