Correlation Between National Tax and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both National Tax and Federated Kaufmann 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 Federated Kaufmann 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 Federated Kaufmann Fund, you can compare the effects of market volatilities on National Tax and Federated Kaufmann 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 Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Federated Kaufmann.
Diversification Opportunities for National Tax and Federated Kaufmann
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Federated is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Federated Kaufmann Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann 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 Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann has no effect on the direction of National Tax i.e., National Tax and Federated Kaufmann go up and down completely randomly.
Pair Corralation between National Tax and Federated Kaufmann
Assuming the 90 days horizon The National Tax Free is expected to generate 0.12 times more return on investment than Federated Kaufmann. However, The National Tax Free is 8.21 times less risky than Federated Kaufmann. It trades about 0.07 of its potential returns per unit of risk. Federated Kaufmann Fund is currently generating about -0.06 per unit of risk. If you would invest 1,870 in The National Tax Free on September 13, 2024 and sell it today you would earn a total of 12.00 from holding The National Tax Free or generate 0.64% 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. Federated Kaufmann Fund
Performance |
| Timeline |
| National Tax |
| Federated Kaufmann |
National Tax and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Federated Kaufmann
The main advantage of trading using opposite National Tax and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann'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 |
| Federated Kaufmann vs. Federated Emerging Market | Federated Kaufmann vs. Federated Mdt All | Federated Kaufmann vs. Federated Mdt Balanced | Federated Kaufmann vs. Federated Global 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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