Correlation Between Kansas Municipal and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Kansas Municipal 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 Kansas Municipal and Maine Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kansas Municipal Fund and Maine Municipal Fund, you can compare the effects of market volatilities on Kansas Municipal 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 Kansas Municipal with a short position of Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kansas Municipal and Maine Municipal.
Diversification Opportunities for Kansas Municipal and Maine Municipal
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KANSAS and Maine is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Kansas Municipal Fund and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal and Kansas 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 Kansas Municipal Fund 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 Kansas Municipal i.e., Kansas Municipal and Maine Municipal go up and down completely randomly.
Pair Corralation between Kansas Municipal and Maine Municipal
Assuming the 90 days horizon Kansas Municipal is expected to generate 1.38 times less return on investment than Maine Municipal. In addition to that, Kansas Municipal is 1.01 times more volatile than Maine Municipal Fund. It trades about 0.15 of its total potential returns per unit of risk. Maine Municipal Fund is currently generating about 0.21 per unit of volatility. If you would invest 942.00 in Maine Municipal Fund on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Maine Municipal Fund or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kansas Municipal Fund vs. Maine Municipal Fund
Performance |
| Timeline |
| Kansas Municipal |
| Maine Municipal |
Kansas Municipal and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kansas Municipal and Maine Municipal
The main advantage of trading using opposite Kansas Municipal and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kansas Municipal 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.| Kansas Municipal vs. Metropolitan West High | Kansas Municipal vs. Siit High Yield | Kansas Municipal vs. Needham Aggressive Growth | Kansas Municipal vs. Multimanager Lifestyle Aggressive |
| Maine Municipal vs. Ultra Short Fixed Income | Maine Municipal vs. Gmo Global Equity | Maine Municipal vs. Cutler Equity | Maine Municipal vs. The Hartford Equity |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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