Correlation Between High-yield Municipal and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI Emerging, you can compare the effects of market volatilities on High-yield Municipal and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Xtrackers MSCI.
Diversification Opportunities for High-yield Municipal and Xtrackers MSCI
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High-yield and Xtrackers is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Xtrackers MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Emerging 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Emerging has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between High-yield Municipal and Xtrackers MSCI
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.46 times more return on investment than Xtrackers MSCI. However, High Yield Municipal Fund is 2.15 times less risky than Xtrackers MSCI. It trades about 0.16 of its potential returns per unit of risk. Xtrackers MSCI Emerging is currently generating about -0.18 per unit of risk. If you would invest 887.00 in High Yield Municipal Fund on August 30, 2024 and sell it today you would earn a total of 12.00 from holding High Yield Municipal Fund or generate 1.35% 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. Xtrackers MSCI Emerging
Performance |
| Timeline |
| High Yield Municipal |
| Xtrackers MSCI Emerging |
High-yield Municipal and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Xtrackers MSCI
The main advantage of trading using opposite High-yield Municipal and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI'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 |
| Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency Hedged |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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