Correlation Between High-yield Municipal and Global X
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Global X 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 Global X 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 Global X SuperIncome, you can compare the effects of market volatilities on High-yield Municipal and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Global X.
Diversification Opportunities for High-yield Municipal and Global X
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High-yield and Global is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Global X SuperIncome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperIncome 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SuperIncome has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Global X go up and down completely randomly.
Pair Corralation between High-yield Municipal and Global X
Assuming the 90 days horizon High Yield Municipal Fund is expected to under-perform the Global X. But the mutual fund apears to be less risky and, when comparing its historical volatility, High Yield Municipal Fund is 1.37 times less risky than Global X. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Global X SuperIncome is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 965.00 in Global X SuperIncome on August 30, 2024 and sell it today you would earn a total of 13.00 from holding Global X SuperIncome or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Global X SuperIncome
Performance |
| Timeline |
| High Yield Municipal |
| Global X SuperIncome |
High-yield Municipal and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Global X
The main advantage of trading using opposite High-yield Municipal and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X'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 |
| Global X vs. Freedom Day Dividend | Global X vs. Franklin Templeton ETF | Global X vs. iShares MSCI China | Global X vs. Tidal Trust II |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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