Correlation Between American High-income and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both American High-income and Hartford 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 American High-income and Hartford Municipal 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 Hartford Municipal Income, you can compare the effects of market volatilities on American High-income and Hartford 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 American High-income with a short position of Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Hartford Municipal.
Diversification Opportunities for American High-income and Hartford Municipal
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Hartford is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Hartford Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal Income 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 Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal Income has no effect on the direction of American High-income i.e., American High-income and Hartford Municipal go up and down completely randomly.
Pair Corralation between American High-income and Hartford Municipal
Assuming the 90 days horizon American High Income Municipal is expected to generate 1.3 times more return on investment than Hartford Municipal. However, American High-income is 1.3 times more volatile than Hartford Municipal Income. It trades about 0.03 of its potential returns per unit of risk. Hartford Municipal Income is currently generating about 0.03 per unit of risk. If you would invest 1,530 in American High Income Municipal on November 3, 2024 and sell it today you would earn a total of 2.00 from holding American High Income Municipal or generate 0.13% 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. Hartford Municipal Income
Performance |
| Timeline |
| American High Income |
| Hartford Municipal Income |
American High-income and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Hartford Municipal
The main advantage of trading using opposite American High-income and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income position performs unexpectedly, Hartford 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 Hartford Municipal will offset losses from the drop in Hartford Municipal's long position.| American High-income vs. Alphacentric Lifesci Healthcare | American High-income vs. Alger Health Sciences | American High-income vs. Health Care Ultrasector | American High-income vs. The Hartford Healthcare |
| Hartford Municipal vs. Schwab Government Money | Hartford Municipal vs. Cref Money Market | Hartford Municipal vs. Davis Financial Fund | Hartford Municipal vs. 1919 Financial Services |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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