Correlation Between Hartford Municipal and Schwab Municipal
Can any of the company-specific risk be diversified away by investing in both Hartford Municipal and Schwab 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 Hartford Municipal and Schwab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Municipal Opportunities and Schwab Municipal Bond, you can compare the effects of market volatilities on Hartford Municipal and Schwab 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 Hartford Municipal with a short position of Schwab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Municipal and Schwab Municipal.
Diversification Opportunities for Hartford Municipal and Schwab Municipal
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hartford and Schwab is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Municipal Opportuniti and Schwab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Municipal Bond and Hartford 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 Hartford Municipal Opportunities are associated (or correlated) with Schwab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Municipal Bond has no effect on the direction of Hartford Municipal i.e., Hartford Municipal and Schwab Municipal go up and down completely randomly.
Pair Corralation between Hartford Municipal and Schwab Municipal
Given the investment horizon of 90 days Hartford Municipal Opportunities is expected to under-perform the Schwab Municipal. But the etf apears to be less risky and, when comparing its historical volatility, Hartford Municipal Opportunities is 1.27 times less risky than Schwab Municipal. The etf trades about -0.04 of its potential returns per unit of risk. The Schwab Municipal Bond is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,599 in Schwab Municipal Bond on August 25, 2024 and sell it today you would lose (9.00) from holding Schwab Municipal Bond or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Municipal Opportuniti vs. Schwab Municipal Bond
Performance |
| Timeline |
| Hartford Municipal |
| Schwab Municipal Bond |
Hartford Municipal and Schwab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Municipal and Schwab Municipal
The main advantage of trading using opposite Hartford Municipal and Schwab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Municipal position performs unexpectedly, Schwab 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 Schwab Municipal will offset losses from the drop in Schwab Municipal's long position.| Hartford Municipal vs. IQ MacKay Municipal | Hartford Municipal vs. IQ MacKay Municipal | Hartford Municipal vs. Franklin Liberty Federal | Hartford Municipal vs. Franklin Liberty Intermediate |
| Schwab Municipal vs. Vanguard Tax Exempt Bond | Schwab Municipal vs. Vanguard Short Term Tax Exempt | Schwab Municipal vs. PIMCO Intermediate Municipal | Schwab Municipal vs. Schwab Long Term Treasury |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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