Correlation Between Chn Strs and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Chn Strs and Ishares 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 Chn Strs and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chn Strs Insti and Ishares Municipal Bond, you can compare the effects of market volatilities on Chn Strs and Ishares 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 Chn Strs with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chn Strs and Ishares Municipal.
Diversification Opportunities for Chn Strs and Ishares Municipal
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chn and Ishares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chn Strs Insti and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Chn Strs 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 Chn Strs Insti are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Chn Strs i.e., Chn Strs and Ishares Municipal go up and down completely randomly.
Pair Corralation between Chn Strs and Ishares Municipal
Assuming the 90 days horizon Chn Strs is expected to generate 1.51 times less return on investment than Ishares Municipal. In addition to that, Chn Strs is 2.64 times more volatile than Ishares Municipal Bond. It trades about 0.03 of its total potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.11 per unit of volatility. If you would invest 1,100 in Ishares Municipal Bond on August 26, 2024 and sell it today you would earn a total of 8.00 from holding Ishares Municipal Bond or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chn Strs Insti vs. Ishares Municipal Bond
Performance |
| Timeline |
| Chn Strs Insti |
| Ishares Municipal Bond |
Chn Strs and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chn Strs and Ishares Municipal
The main advantage of trading using opposite Chn Strs and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chn Strs position performs unexpectedly, Ishares 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Chn Strs vs. Ishares Municipal Bond | Chn Strs vs. Nuveen All American Municipal | Chn Strs vs. Counterpoint Tactical Municipal | Chn Strs vs. Oklahoma Municipal Fund |
| Ishares Municipal vs. Franklin High Yield | Ishares Municipal vs. Transamerica Intermediate Muni | Ishares Municipal vs. Pace Municipal Fixed | Ishares Municipal vs. Nuveen All American Municipal |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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