Correlation Between Alternative Asset and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Alternative Asset and Maine 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 Alternative Asset and Maine Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Asset Allocation and Maine Municipal Fund, you can compare the effects of market volatilities on Alternative Asset and Maine 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 Alternative Asset with a short position of Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Asset and Maine Municipal.
Diversification Opportunities for Alternative Asset and Maine Municipal
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alternative and Maine is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Asset Allocation and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal and Alternative Asset 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 Alternative Asset Allocation are associated (or correlated) with Maine Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maine Municipal has no effect on the direction of Alternative Asset i.e., Alternative Asset and Maine Municipal go up and down completely randomly.
Pair Corralation between Alternative Asset and Maine Municipal
Assuming the 90 days horizon Alternative Asset Allocation is expected to under-perform the Maine Municipal. In addition to that, Alternative Asset is 2.07 times more volatile than Maine Municipal Fund. It trades about -0.21 of its total potential returns per unit of risk. Maine Municipal Fund is currently generating about -0.37 per unit of volatility. If you would invest 962.00 in Maine Municipal Fund on October 9, 2024 and sell it today you would lose (16.00) from holding Maine Municipal Fund or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Asset Allocation vs. Maine Municipal Fund
Performance |
| Timeline |
| Alternative Asset |
| Maine Municipal |
Alternative Asset and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Asset and Maine Municipal
The main advantage of trading using opposite Alternative Asset and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Asset position performs unexpectedly, Maine 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 Maine Municipal will offset losses from the drop in Maine Municipal's long position.The idea behind Alternative Asset Allocation and Maine Municipal Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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