Correlation Between AstroNova and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both AstroNova and High-yield Municipal 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 AstroNova and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstroNova and High Yield Municipal Fund, you can compare the effects of market volatilities on AstroNova and High-yield Municipal 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 AstroNova with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstroNova and High-yield Municipal.
Diversification Opportunities for AstroNova and High-yield Municipal
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AstroNova and High-yield is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AstroNova and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and AstroNova 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 AstroNova are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of AstroNova i.e., AstroNova and High-yield Municipal go up and down completely randomly.
Pair Corralation between AstroNova and High-yield Municipal
Given the investment horizon of 90 days AstroNova is expected to generate 1.46 times less return on investment than High-yield Municipal. In addition to that, AstroNova is 7.96 times more volatile than High Yield Municipal Fund. It trades about 0.01 of its total potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.08 per unit of volatility. If you would invest 796.00 in High Yield Municipal Fund on November 19, 2024 and sell it today you would earn a total of 90.00 from holding High Yield Municipal Fund or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstroNova vs. High Yield Municipal Fund
Performance |
| Timeline |
| AstroNova |
| High Yield Municipal |
AstroNova and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstroNova and High-yield Municipal
The main advantage of trading using opposite AstroNova and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstroNova position performs unexpectedly, High-yield Municipal 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| AstroNova vs. Key Tronic | AstroNova vs. Identiv | AstroNova vs. Red Cat Holdings | AstroNova vs. TransAct Technologies Incorporated |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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