Correlation Between Hawaii Municipal and National Tax
Can any of the company-specific risk be diversified away by investing in both Hawaii Municipal and National Tax 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 Hawaii Municipal and National Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawaii Municipal Bond and The National Tax Free, you can compare the effects of market volatilities on Hawaii Municipal and National Tax 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 Hawaii Municipal with a short position of National Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaii Municipal and National Tax.
Diversification Opportunities for Hawaii Municipal and National Tax
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hawaii and National is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hawaii Municipal Bond and The National Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Tax and Hawaii 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 Hawaii Municipal Bond are associated (or correlated) with National Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Tax has no effect on the direction of Hawaii Municipal i.e., Hawaii Municipal and National Tax go up and down completely randomly.
Pair Corralation between Hawaii Municipal and National Tax
Assuming the 90 days horizon Hawaii Municipal is expected to generate 1.78 times less return on investment than National Tax. But when comparing it to its historical volatility, Hawaii Municipal Bond is 1.17 times less risky than National Tax. It trades about 0.04 of its potential returns per unit of risk. The National Tax Free is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,798 in The National Tax Free on September 12, 2024 and sell it today you would earn a total of 86.00 from holding The National Tax Free or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaii Municipal Bond vs. The National Tax Free
Performance |
| Timeline |
| Hawaii Municipal Bond |
| National Tax |
Hawaii Municipal and National Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaii Municipal and National Tax
The main advantage of trading using opposite Hawaii Municipal and National Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaii Municipal position performs unexpectedly, National Tax 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 National Tax will offset losses from the drop in National Tax's long position.| Hawaii Municipal vs. Wesmark Government Bond | Hawaii Municipal vs. Wesmark Growth Fund | Hawaii Municipal vs. Wesmark Balanced Fund | Hawaii Municipal vs. Wesmark Small Pany |
| National Tax vs. Tax Exempt Bond | National Tax vs. Blackrock National Municipal | National Tax vs. SCOR PK | National Tax vs. Morningstar Unconstrained Allocation |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |