Correlation Between National Tax and Oklahoma Municipal
Can any of the company-specific risk be diversified away by investing in both National Tax and Oklahoma 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 National Tax and Oklahoma Municipal 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 Oklahoma Municipal Fund, you can compare the effects of market volatilities on National Tax and Oklahoma 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 National Tax with a short position of Oklahoma Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Oklahoma Municipal.
Diversification Opportunities for National Tax and Oklahoma Municipal
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and Oklahoma is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma Municipal 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 Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of National Tax i.e., National Tax and Oklahoma Municipal go up and down completely randomly.
Pair Corralation between National Tax and Oklahoma Municipal
Assuming the 90 days horizon The National Tax Free is expected to generate 0.84 times more return on investment than Oklahoma Municipal. However, The National Tax Free is 1.19 times less risky than Oklahoma Municipal. It trades about 0.06 of its potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.05 per unit of risk. If you would invest 1,763 in The National Tax Free on September 14, 2024 and sell it today you would earn a total of 113.00 from holding The National Tax Free or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Oklahoma Municipal Fund
Performance |
| Timeline |
| National Tax |
| Oklahoma Municipal |
National Tax and Oklahoma Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Oklahoma Municipal
The main advantage of trading using opposite National Tax and Oklahoma Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax position performs unexpectedly, Oklahoma 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 Oklahoma Municipal will offset losses from the drop in Oklahoma Municipal'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 |
| Oklahoma Municipal vs. Forum Real Estate | Oklahoma Municipal vs. Columbia Real Estate | Oklahoma Municipal vs. Pender Real Estate | Oklahoma Municipal vs. Prudential Real Estate |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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