Correlation Between High-yield Municipal and American Century
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and American Century 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 American Century 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 American Century Diversified, you can compare the effects of market volatilities on High-yield Municipal and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and American Century.
Diversification Opportunities for High-yield Municipal and American Century
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High-yield and American is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and American Century Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Div 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Div has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and American Century go up and down completely randomly.
Pair Corralation between High-yield Municipal and American Century
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.73 times more return on investment than American Century. However, High Yield Municipal Fund is 1.36 times less risky than American Century. It trades about 0.11 of its potential returns per unit of risk. American Century Diversified is currently generating about 0.08 per unit of risk. If you would invest 852.00 in High Yield Municipal Fund on August 23, 2024 and sell it today you would earn a total of 44.00 from holding High Yield Municipal Fund or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. American Century Diversified
Performance |
| Timeline |
| High Yield Municipal |
| American Century Div |
High-yield Municipal and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and American Century
The main advantage of trading using opposite High-yield Municipal and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century'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 |
| American Century vs. SPDR Barclays Short | American Century vs. SPDR Bloomberg Emerging | American Century vs. SPDR Barclays Long | American Century vs. SPDR Barclays Short |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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