Correlation Between American High-income and Cardinal Small
Can any of the company-specific risk be diversified away by investing in both American High-income and Cardinal Small 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 Cardinal Small 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 Cardinal Small Cap, you can compare the effects of market volatilities on American High-income and Cardinal Small 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 Cardinal Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Cardinal Small.
Diversification Opportunities for American High-income and Cardinal Small
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Cardinal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Cardinal Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Small Cap 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 Cardinal Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Small Cap has no effect on the direction of American High-income i.e., American High-income and Cardinal Small go up and down completely randomly.
Pair Corralation between American High-income and Cardinal Small
Assuming the 90 days horizon American High-income is expected to generate 1.29 times less return on investment than Cardinal Small. But when comparing it to its historical volatility, American High Income Municipal is 4.01 times less risky than Cardinal Small. It trades about 0.07 of its potential returns per unit of risk. Cardinal Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,313 in Cardinal Small Cap on October 11, 2024 and sell it today you would earn a total of 131.00 from holding Cardinal Small Cap or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Cardinal Small Cap
Performance |
| Timeline |
| American High Income |
| Cardinal Small Cap |
American High-income and Cardinal Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Cardinal Small
The main advantage of trading using opposite American High-income and Cardinal Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income position performs unexpectedly, Cardinal Small 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 Cardinal Small will offset losses from the drop in Cardinal Small's long position.The idea behind American High Income Municipal and Cardinal Small Cap 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.
| Cardinal Small vs. Inverse Government Long | Cardinal Small vs. Blackrock Pa Muni | Cardinal Small vs. American High Income Municipal | Cardinal Small vs. Ishares Municipal Bond |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| 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 | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |