Correlation Between High-yield Municipal and Adams Diversified
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Adams Diversified 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 High-yield Municipal and Adams Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Adams Diversified Equity, you can compare the effects of market volatilities on High-yield Municipal and Adams Diversified 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 High-yield Municipal with a short position of Adams Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Adams Diversified.
Diversification Opportunities for High-yield Municipal and Adams Diversified
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between High-yield and Adams is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Adams Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Diversified Equity and High-yield Municipal 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 High Yield Municipal Fund are associated (or correlated) with Adams Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Diversified Equity has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Adams Diversified go up and down completely randomly.
Pair Corralation between High-yield Municipal and Adams Diversified
Assuming the 90 days horizon High-yield Municipal is expected to generate 1.17 times less return on investment than Adams Diversified. But when comparing it to its historical volatility, High Yield Municipal Fund is 2.59 times less risky than Adams Diversified. It trades about 0.19 of its potential returns per unit of risk. Adams Diversified Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,004 in Adams Diversified Equity on August 31, 2024 and sell it today you would earn a total of 33.00 from holding Adams Diversified Equity or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Adams Diversified Equity
Performance |
| Timeline |
| High Yield Municipal |
| Adams Diversified Equity |
High-yield Municipal and Adams Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Adams Diversified
The main advantage of trading using opposite High-yield Municipal and Adams Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Adams Diversified 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 Adams Diversified will offset losses from the drop in Adams Diversified's long position.The idea behind High Yield Municipal Fund and Adams Diversified Equity 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.
| Adams Diversified vs. Tri Continental Closed | Adams Diversified vs. SRH Total Return | Adams Diversified vs. Putnam Municipal Opportunities | Adams Diversified vs. Tortoise Energy Independence |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Transaction History View history of all your transactions and understand their impact on performance |