Correlation Between High-yield Municipal and Freedom 100
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Freedom 100 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 Freedom 100 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 Freedom 100 Emerging, you can compare the effects of market volatilities on High-yield Municipal and Freedom 100 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 Freedom 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Freedom 100.
Diversification Opportunities for High-yield Municipal and Freedom 100
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between High-yield and Freedom is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Freedom 100 Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom 100 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 Freedom 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom 100 Emerging has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Freedom 100 go up and down completely randomly.
Pair Corralation between High-yield Municipal and Freedom 100
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.35 times more return on investment than Freedom 100. However, High Yield Municipal Fund is 2.82 times less risky than Freedom 100. It trades about 0.16 of its potential returns per unit of risk. Freedom 100 Emerging is currently generating about -0.25 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Freedom 100 Emerging
Performance |
| Timeline |
| High Yield Municipal |
| Freedom 100 Emerging |
High-yield Municipal and Freedom 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Freedom 100
The main advantage of trading using opposite High-yield Municipal and Freedom 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Freedom 100 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 Freedom 100 will offset losses from the drop in Freedom 100'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 |
| Freedom 100 vs. Horizon Kinetics Inflation | Freedom 100 vs. iShares MSCI Emerging | Freedom 100 vs. iShares Emerging Markets | Freedom 100 vs. WisdomTree International High |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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