Correlation Between National Tax and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both National Tax and Amcap Fund 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 National Tax and Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Amcap Fund Class, you can compare the effects of market volatilities on National Tax and Amcap Fund 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 National Tax with a short position of Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Amcap Fund.
Diversification Opportunities for National Tax and Amcap Fund
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Amcap is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class and National Tax 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 The National Tax Free are associated (or correlated) with Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of National Tax i.e., National Tax and Amcap Fund go up and down completely randomly.
Pair Corralation between National Tax and Amcap Fund
Assuming the 90 days horizon National Tax is expected to generate 1.79 times less return on investment than Amcap Fund. But when comparing it to its historical volatility, The National Tax Free is 8.32 times less risky than Amcap Fund. It trades about 0.55 of its potential returns per unit of risk. Amcap Fund Class is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,605 in Amcap Fund Class on September 13, 2024 and sell it today you would earn a total of 86.00 from holding Amcap Fund Class or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Amcap Fund Class
Performance |
| Timeline |
| National Tax |
| Amcap Fund Class |
National Tax and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Amcap Fund
The main advantage of trading using opposite National Tax and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.| National Tax vs. The Missouri Tax Free | National Tax vs. The Bond Fund | National Tax vs. High Yield Municipal Fund | National Tax vs. Fidelity Intermediate Municipal |
| Amcap Fund vs. Doubleline Yield Opportunities | Amcap Fund vs. The National Tax Free | Amcap Fund vs. Franklin High Yield | Amcap Fund vs. Pace High Yield |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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