Correlation Between High-yield Municipal and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Lifex Inflation-protec 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 Lifex Inflation-protec 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 Lifex Inflation Protected Income, you can compare the effects of market volatilities on High-yield Municipal and Lifex Inflation-protec 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 Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Lifex Inflation-protec.
Diversification Opportunities for High-yield Municipal and Lifex Inflation-protec
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between High-yield and Lifex is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec 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 Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between High-yield Municipal and Lifex Inflation-protec
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.68 times more return on investment than Lifex Inflation-protec. However, High Yield Municipal Fund is 1.46 times less risky than Lifex Inflation-protec. It trades about 0.1 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.05 per unit of risk. If you would invest 816.00 in High Yield Municipal Fund on September 4, 2024 and sell it today you would earn a total of 87.00 from holding High Yield Municipal Fund or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 58.87% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| High Yield Municipal |
| Lifex Inflation-protec |
High-yield Municipal and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Lifex Inflation-protec
The main advantage of trading using opposite High-yield Municipal and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Lifex Inflation-protec 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 Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec'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 |
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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