Correlation Between Kentucky Tax-free and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Kentucky Tax-free 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 Kentucky Tax-free and Maine Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kentucky Tax Free Income and Maine Municipal Fund, you can compare the effects of market volatilities on Kentucky Tax-free 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 Kentucky Tax-free with a short position of Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky Tax-free and Maine Municipal.
Diversification Opportunities for Kentucky Tax-free and Maine Municipal
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kentucky and Maine is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Income and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal and Kentucky Tax-free 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 Kentucky Tax Free Income 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 Kentucky Tax-free i.e., Kentucky Tax-free and Maine Municipal go up and down completely randomly.
Pair Corralation between Kentucky Tax-free and Maine Municipal
Assuming the 90 days horizon Kentucky Tax Free Income is expected to generate 0.83 times more return on investment than Maine Municipal. However, Kentucky Tax Free Income is 1.21 times less risky than Maine Municipal. It trades about -0.03 of its potential returns per unit of risk. Maine Municipal Fund is currently generating about -0.04 per unit of risk. If you would invest 726.00 in Kentucky Tax Free Income on August 25, 2024 and sell it today you would lose (3.00) from holding Kentucky Tax Free Income or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kentucky Tax Free Income vs. Maine Municipal Fund
Performance |
| Timeline |
| Kentucky Tax Free |
| Maine Municipal |
Kentucky Tax-free and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentucky Tax-free and Maine Municipal
The main advantage of trading using opposite Kentucky Tax-free and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky Tax-free 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.| Kentucky Tax-free vs. Kinetics Global Fund | Kentucky Tax-free vs. Dodge Global Stock | Kentucky Tax-free vs. Morgan Stanley Global | Kentucky Tax-free vs. Vanguard Global Credit |
| Maine Municipal vs. Viking Tax Free Fund | Maine Municipal vs. Viking Tax Free Fund | Maine Municipal vs. Viking Tax Free Fund | Maine Municipal vs. Viking Tax Free Fund |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |