Correlation Between Destinations Municipal and Destinations International
Can any of the company-specific risk be diversified away by investing in both Destinations Municipal and Destinations International 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 Destinations Municipal and Destinations International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Destinations Municipal Fixed and Destinations International Equity, you can compare the effects of market volatilities on Destinations Municipal and Destinations International 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 Destinations Municipal with a short position of Destinations International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destinations Municipal and Destinations International.
Diversification Opportunities for Destinations Municipal and Destinations International
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Destinations and Destinations is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Destinations Municipal Fixed and Destinations International Equ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations International and Destinations 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 Destinations Municipal Fixed are associated (or correlated) with Destinations International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations International has no effect on the direction of Destinations Municipal i.e., Destinations Municipal and Destinations International go up and down completely randomly.
Pair Corralation between Destinations Municipal and Destinations International
Assuming the 90 days horizon Destinations Municipal is expected to generate 4.53 times less return on investment than Destinations International. But when comparing it to its historical volatility, Destinations Municipal Fixed is 5.0 times less risky than Destinations International. It trades about 0.27 of its potential returns per unit of risk. Destinations International Equity is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,110 in Destinations International Equity on November 28, 2024 and sell it today you would earn a total of 42.00 from holding Destinations International Equity or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Destinations Municipal Fixed vs. Destinations International Equ
Performance |
| Timeline |
| Destinations Municipal |
| Destinations International |
Destinations Municipal and Destinations International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Destinations Municipal and Destinations International
The main advantage of trading using opposite Destinations Municipal and Destinations International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Destinations Municipal position performs unexpectedly, Destinations International 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 Destinations International will offset losses from the drop in Destinations International's long position.| Destinations Municipal vs. Pace Select Advisors | Destinations Municipal vs. Aig Government Money | Destinations Municipal vs. T Rowe Price | Destinations Municipal vs. Dreyfus Institutional Reserves |
| Destinations International vs. Virtus High Yield | Destinations International vs. Pioneer High Income | Destinations International vs. Ab High Income | Destinations International vs. Metropolitan West High |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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