Correlation Between High Yield and PSMG
Can any of the company-specific risk be diversified away by investing in both High Yield and PSMG 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 PSMG 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 PSMG, you can compare the effects of market volatilities on High Yield and PSMG 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 PSMG. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and PSMG.
Diversification Opportunities for High Yield and PSMG
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between High and PSMG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and PSMG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSMG 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 PSMG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSMG has no effect on the direction of High Yield i.e., High Yield and PSMG go up and down completely randomly.
Pair Corralation between High Yield and PSMG
If you would invest 805.00 in High Yield Municipal Fund on January 18, 2025 and sell it today you would earn a total of 47.00 from holding High Yield Municipal Fund or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. PSMG
Performance |
| Timeline |
| High Yield Municipal |
| PSMG |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
High Yield and PSMG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and PSMG
The main advantage of trading using opposite High Yield and PSMG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, PSMG 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 PSMG will offset losses from the drop in PSMG'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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