Correlation Between Quantitative and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Quantitative and Municipal Bond 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 Quantitative and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantitative Longshort Equity and Municipal Bond Fund, you can compare the effects of market volatilities on Quantitative and Municipal Bond 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 Quantitative with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantitative and Municipal Bond.
Diversification Opportunities for Quantitative and Municipal Bond
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Quantitative and Municipal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Quantitative Longshort Equity and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond and Quantitative 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 Quantitative Longshort Equity are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of Quantitative i.e., Quantitative and Municipal Bond go up and down completely randomly.
Pair Corralation between Quantitative and Municipal Bond
Assuming the 90 days horizon Quantitative Longshort Equity is expected to generate 1.74 times more return on investment than Municipal Bond. However, Quantitative is 1.74 times more volatile than Municipal Bond Fund. It trades about 0.1 of its potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.08 per unit of risk. If you would invest 1,230 in Quantitative Longshort Equity on August 30, 2024 and sell it today you would earn a total of 241.00 from holding Quantitative Longshort Equity or generate 19.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quantitative Longshort Equity vs. Municipal Bond Fund
Performance |
| Timeline |
| Quantitative Longshort |
| Municipal Bond |
Quantitative and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quantitative and Municipal Bond
The main advantage of trading using opposite Quantitative and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantitative position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Quantitative vs. Neuberger Berman Long | Quantitative vs. Neuberger Berman Long | Quantitative vs. Pimco Rae Worldwide |
| Municipal Bond vs. Dunham Porategovernment Bond | Municipal Bond vs. Government Securities Fund | Municipal Bond vs. Short Term Government Fund | Municipal Bond vs. Blackrock Government Bond |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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