Correlation Between Mid Cap and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap 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 Mid Cap Value and High Yield Municipal Fund, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and High-yield Municipal.
Diversification Opportunities for Mid Cap and High-yield Municipal
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mid and High-yield is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value 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 Mid Cap 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 Mid Cap Value 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 Mid Cap i.e., Mid Cap and High-yield Municipal go up and down completely randomly.
Pair Corralation between Mid Cap and High-yield Municipal
Assuming the 90 days horizon Mid Cap Value is expected to generate 2.27 times more return on investment than High-yield Municipal. However, Mid Cap is 2.27 times more volatile than High Yield Municipal Fund. It trades about 0.29 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.18 per unit of risk. If you would invest 1,683 in Mid Cap Value on September 5, 2024 and sell it today you would earn a total of 80.00 from holding Mid Cap Value or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mid Cap Value vs. High Yield Municipal Fund
Performance |
| Timeline |
| Mid Cap Value |
| High Yield Municipal |
Mid Cap and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and High-yield Municipal
The main advantage of trading using opposite Mid Cap and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. Equity Growth Fund | Mid Cap vs. Income Growth Fund | Mid Cap vs. Diversified Bond Fund | Mid Cap vs. Emerging Markets Fund |
| High-yield Municipal vs. Rbb Fund | High-yield Municipal vs. Vanguard Windsor Fund | High-yield Municipal vs. Small Cap Stock | High-yield Municipal vs. Growth Strategy 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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