Correlation Between American High-income and Counterpoint Tactical
Can any of the company-specific risk be diversified away by investing in both American High-income and Counterpoint Tactical 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 American High-income and Counterpoint Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Counterpoint Tactical Municipal, you can compare the effects of market volatilities on American High-income and Counterpoint Tactical 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 American High-income with a short position of Counterpoint Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Counterpoint Tactical.
Diversification Opportunities for American High-income and Counterpoint Tactical
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Counterpoint is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Counterpoint Tactical Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical and American High-income 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 American High Income Municipal are associated (or correlated) with Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of American High-income i.e., American High-income and Counterpoint Tactical go up and down completely randomly.
Pair Corralation between American High-income and Counterpoint Tactical
Assuming the 90 days horizon American High Income Municipal is expected to generate 0.93 times more return on investment than Counterpoint Tactical. However, American High Income Municipal is 1.08 times less risky than Counterpoint Tactical. It trades about 0.16 of its potential returns per unit of risk. Counterpoint Tactical Municipal is currently generating about 0.09 per unit of risk. If you would invest 1,533 in American High Income Municipal on August 28, 2024 and sell it today you would earn a total of 17.00 from holding American High Income Municipal or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Counterpoint Tactical Municipa
Performance |
| Timeline |
| American High Income |
| Counterpoint Tactical |
American High-income and Counterpoint Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Counterpoint Tactical
The main advantage of trading using opposite American High-income and Counterpoint Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income position performs unexpectedly, Counterpoint Tactical 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 Counterpoint Tactical will offset losses from the drop in Counterpoint Tactical's long position.The idea behind American High Income Municipal and Counterpoint Tactical Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Counterpoint Tactical vs. Counterpoint Tactical Municipal | Counterpoint Tactical vs. Counterpoint Tactical Equity | Counterpoint Tactical vs. Counterpoint Tactical Equity |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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