Correlation Between Nebraska Municipal and American Funds
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal and American Funds 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 Nebraska Municipal and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nebraska Municipal Fund and American Funds 2025, you can compare the effects of market volatilities on Nebraska Municipal and American Funds 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 Nebraska Municipal with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and American Funds.
Diversification Opportunities for Nebraska Municipal and American Funds
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nebraska and AMERICAN is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and American Funds 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2025 and Nebraska 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 Nebraska Municipal Fund are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2025 has no effect on the direction of Nebraska Municipal i.e., Nebraska Municipal and American Funds go up and down completely randomly.
Pair Corralation between Nebraska Municipal and American Funds
Assuming the 90 days horizon Nebraska Municipal is expected to generate 2.42 times less return on investment than American Funds. But when comparing it to its historical volatility, Nebraska Municipal Fund is 1.24 times less risky than American Funds. It trades about 0.07 of its potential returns per unit of risk. American Funds 2025 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,508 in American Funds 2025 on November 27, 2024 and sell it today you would earn a total of 12.00 from holding American Funds 2025 or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nebraska Municipal Fund vs. American Funds 2025
Performance |
| Timeline |
| Nebraska Municipal |
| American Funds 2025 |
Nebraska Municipal and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and American Funds
The main advantage of trading using opposite Nebraska Municipal and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Nebraska Municipal vs. Aqr Managed Futures | Nebraska Municipal vs. The Hartford Inflation | Nebraska Municipal vs. Ab Bond Inflation | Nebraska Municipal vs. The Hartford Inflation |
| American Funds vs. Jhancock Diversified Macro | American Funds vs. Diversified Bond Fund | American Funds vs. Massmutual Premier Diversified | American Funds vs. American Century Diversified |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |