Correlation Between Multisector Bond and Oklahoma Municipal
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Oklahoma 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 Multisector Bond and Oklahoma Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Oklahoma Municipal Fund, you can compare the effects of market volatilities on Multisector Bond and Oklahoma 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 Multisector Bond with a short position of Oklahoma Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Oklahoma Municipal.
Diversification Opportunities for Multisector Bond and Oklahoma Municipal
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multisector and Oklahoma is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma Municipal and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of Multisector Bond i.e., Multisector Bond and Oklahoma Municipal go up and down completely randomly.
Pair Corralation between Multisector Bond and Oklahoma Municipal
Assuming the 90 days horizon Multisector Bond Sma is expected to generate 1.84 times more return on investment than Oklahoma Municipal. However, Multisector Bond is 1.84 times more volatile than Oklahoma Municipal Fund. It trades about 0.1 of its potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.05 per unit of risk. If you would invest 1,157 in Multisector Bond Sma on September 2, 2024 and sell it today you would earn a total of 215.00 from holding Multisector Bond Sma or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Oklahoma Municipal Fund
Performance |
| Timeline |
| Multisector Bond Sma |
| Oklahoma Municipal |
Multisector Bond and Oklahoma Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Oklahoma Municipal
The main advantage of trading using opposite Multisector Bond and Oklahoma Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Oklahoma 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 Oklahoma Municipal will offset losses from the drop in Oklahoma Municipal's long position.| Multisector Bond vs. T Rowe Price | Multisector Bond vs. Nuveen Arizona Municipal | Multisector Bond vs. Ishares Municipal Bond | Multisector Bond vs. Franklin High Yield |
| Oklahoma Municipal vs. Royce Global Financial | Oklahoma Municipal vs. Prudential Jennison Financial | Oklahoma Municipal vs. Angel Oak Financial | Oklahoma Municipal vs. Mesirow Financial Small |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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