Correlation Between High Yield and OFX Group
Can any of the company-specific risk be diversified away by investing in both High Yield and OFX Group 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 and OFX Group 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 OFX Group Ltd, you can compare the effects of market volatilities on High Yield and OFX Group 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 with a short position of OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and OFX Group.
Diversification Opportunities for High Yield and OFX Group
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between High and OFX is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group and High Yield 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of High Yield i.e., High Yield and OFX Group go up and down completely randomly.
Pair Corralation between High Yield and OFX Group
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.02 times more return on investment than OFX Group. However, High Yield Municipal Fund is 45.15 times less risky than OFX Group. It trades about -0.08 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.22 per unit of risk. If you would invest 896.00 in High Yield Municipal Fund on September 20, 2024 and sell it today you would lose (3.00) from holding High Yield Municipal Fund or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. OFX Group Ltd
Performance |
| Timeline |
| High Yield Municipal |
| OFX Group |
High Yield and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and OFX Group
The main advantage of trading using opposite High Yield and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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