Correlation Between High-yield Municipal and IShares ESG
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and IShares ESG 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 IShares ESG 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 iShares ESG Screened, you can compare the effects of market volatilities on High-yield Municipal and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and IShares ESG.
Diversification Opportunities for High-yield Municipal and IShares ESG
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between High-yield and IShares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and iShares ESG Screened in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Screened 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Screened has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and IShares ESG go up and down completely randomly.
Pair Corralation between High-yield Municipal and IShares ESG
Assuming the 90 days horizon High-yield Municipal is expected to generate 10.27 times less return on investment than IShares ESG. But when comparing it to its historical volatility, High Yield Municipal Fund is 4.23 times less risky than IShares ESG. It trades about 0.09 of its potential returns per unit of risk. iShares ESG Screened is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,156 in iShares ESG Screened on August 29, 2024 and sell it today you would earn a total of 343.00 from holding iShares ESG Screened or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. iShares ESG Screened
Performance |
| Timeline |
| High Yield Municipal |
| iShares ESG Screened |
High-yield Municipal and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and IShares ESG
The main advantage of trading using opposite High-yield Municipal and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG'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 |
| IShares ESG vs. Invesco PureBeta MSCI | IShares ESG vs. Aquagold International | IShares ESG vs. Morningstar Unconstrained Allocation | IShares ESG vs. High Yield Municipal Fund |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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