Correlation Between Nebraska Municipal and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal 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 Nebraska Municipal and Maine Municipal 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 Maine Municipal Fund, you can compare the effects of market volatilities on Nebraska Municipal 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 Nebraska Municipal with a short position of Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and Maine Municipal.
Diversification Opportunities for Nebraska Municipal and Maine Municipal
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nebraska and Maine is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal 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 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 Nebraska Municipal i.e., Nebraska Municipal and Maine Municipal go up and down completely randomly.
Pair Corralation between Nebraska Municipal and Maine Municipal
Assuming the 90 days horizon Nebraska Municipal Fund is expected to generate 1.2 times more return on investment than Maine Municipal. However, Nebraska Municipal is 1.2 times more volatile than Maine Municipal Fund. It trades about 0.23 of its potential returns per unit of risk. Maine Municipal Fund is currently generating about 0.27 per unit of risk. If you would invest 926.00 in Nebraska Municipal Fund on September 1, 2024 and sell it today you would earn a total of 17.00 from holding Nebraska Municipal Fund or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nebraska Municipal Fund vs. Maine Municipal Fund
Performance |
| Timeline |
| Nebraska Municipal |
| Maine Municipal |
Nebraska Municipal and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and Maine Municipal
The main advantage of trading using opposite Nebraska Municipal and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal 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.| Nebraska Municipal vs. Lord Abbett Convertible | Nebraska Municipal vs. Harbor Vertible Securities | Nebraska Municipal vs. Virtus Convertible | Nebraska Municipal vs. Rationalpier 88 Convertible |
| Maine Municipal vs. Viking Tax Free Fund | Maine Municipal vs. Integrity Dividend Summit | Maine Municipal vs. Integrity Dividend Summit | Maine Municipal vs. Nebraska Municipal 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |