Correlation Between High Yield and National Tax
Can any of the company-specific risk be diversified away by investing in both High Yield and National Tax 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 National Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund C and The National Tax Free, you can compare the effects of market volatilities on High Yield and National Tax 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 National Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and National Tax.
Diversification Opportunities for High Yield and National Tax
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and National is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund C and The National Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Tax 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 Fund C are associated (or correlated) with National Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Tax has no effect on the direction of High Yield i.e., High Yield and National Tax go up and down completely randomly.
Pair Corralation between High Yield and National Tax
Assuming the 90 days horizon High Yield Fund C is expected to generate 1.31 times more return on investment than National Tax. However, High Yield is 1.31 times more volatile than The National Tax Free. It trades about 0.11 of its potential returns per unit of risk. The National Tax Free is currently generating about 0.07 per unit of risk. If you would invest 463.00 in High Yield Fund C on September 12, 2024 and sell it today you would earn a total of 51.00 from holding High Yield Fund C or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund C vs. The National Tax Free
Performance |
| Timeline |
| High Yield Fund |
| National Tax |
High Yield and National Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and National Tax
The main advantage of trading using opposite High Yield and National Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, National Tax 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 National Tax will offset losses from the drop in National Tax's long position.| High Yield vs. The National Tax Free | High Yield vs. Alliancebernstein National Municipal | High Yield vs. Dreyfusstandish Global Fixed | High Yield vs. Franklin High Yield |
| National Tax vs. Tax Exempt Bond | National Tax vs. Blackrock National Municipal | National Tax vs. SCOR PK | National Tax vs. Morningstar Unconstrained Allocation |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |