Correlation Between Maine Municipal and T Rowe
Can any of the company-specific risk be diversified away by investing in both Maine Municipal and T Rowe 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 Maine Municipal and T Rowe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maine Municipal Fund and T Rowe Price, you can compare the effects of market volatilities on Maine Municipal and T Rowe 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 Maine Municipal with a short position of T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maine Municipal and T Rowe.
Diversification Opportunities for Maine Municipal and T Rowe
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maine and TRRAX is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Maine Municipal Fund and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price and Maine 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 Maine Municipal Fund are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Maine Municipal i.e., Maine Municipal and T Rowe go up and down completely randomly.
Pair Corralation between Maine Municipal and T Rowe
Assuming the 90 days horizon Maine Municipal Fund is expected to generate 0.57 times more return on investment than T Rowe. However, Maine Municipal Fund is 1.76 times less risky than T Rowe. It trades about 0.57 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.22 per unit of risk. If you would invest 945.00 in Maine Municipal Fund on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Maine Municipal Fund or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maine Municipal Fund vs. T Rowe Price
Performance |
| Timeline |
| Maine Municipal |
| T Rowe Price |
Maine Municipal and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maine Municipal and T Rowe
The main advantage of trading using opposite Maine Municipal and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maine Municipal position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.| Maine Municipal vs. Viking Tax Free Fund | Maine Municipal vs. Viking Tax Free Fund | Maine Municipal vs. Integrity Dividend Summit | Maine Municipal vs. Integrity Dividend Summit |
| T Rowe vs. T Rowe Price | T Rowe vs. Trowe Price Retirement | T Rowe vs. T Rowe Price | T Rowe vs. T Rowe Price |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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