Correlation Between Kentucky Tax-free and Nebraska Municipal
Can any of the company-specific risk be diversified away by investing in both Kentucky Tax-free and Nebraska 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 Nebraska 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 Nebraska Municipal Fund, you can compare the effects of market volatilities on Kentucky Tax-free and Nebraska 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 Nebraska Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky Tax-free and Nebraska Municipal.
Diversification Opportunities for Kentucky Tax-free and Nebraska Municipal
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kentucky and Nebraska is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Income and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska 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 Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Kentucky Tax-free i.e., Kentucky Tax-free and Nebraska Municipal go up and down completely randomly.
Pair Corralation between Kentucky Tax-free and Nebraska Municipal
Assuming the 90 days horizon Kentucky Tax Free Income is expected to generate 1.01 times more return on investment than Nebraska Municipal. However, Kentucky Tax-free is 1.01 times more volatile than Nebraska Municipal Fund. It trades about 0.04 of its potential returns per unit of risk. Nebraska Municipal Fund is currently generating about 0.01 per unit of risk. If you would invest 689.00 in Kentucky Tax Free Income on November 2, 2024 and sell it today you would earn a total of 30.00 from holding Kentucky Tax Free Income or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Kentucky Tax Free Income vs. Nebraska Municipal Fund
Performance |
| Timeline |
| Kentucky Tax Free |
| Nebraska Municipal |
Kentucky Tax-free and Nebraska Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentucky Tax-free and Nebraska Municipal
The main advantage of trading using opposite Kentucky Tax-free and Nebraska Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky Tax-free position performs unexpectedly, Nebraska 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 Nebraska Municipal will offset losses from the drop in Nebraska Municipal's long position.| Kentucky Tax-free vs. Oppenheimer Gold Special | Kentucky Tax-free vs. Deutsche Gold Precious | Kentucky Tax-free vs. Gold Portfolio Fidelity | Kentucky Tax-free vs. Gabelli Gold Fund |
| Nebraska Municipal vs. Commonwealth Global Fund | Nebraska Municipal vs. Barings Global Floating | Nebraska Municipal vs. Rbb Fund | Nebraska Municipal vs. Qs Global 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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