Correlation Between Nebraska Municipal and Oklahoma Municipal
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal 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 Nebraska Municipal and Oklahoma 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 Oklahoma Municipal Fund, you can compare the effects of market volatilities on Nebraska Municipal 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 Nebraska Municipal with a short position of Oklahoma Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and Oklahoma Municipal.
Diversification Opportunities for Nebraska Municipal and Oklahoma Municipal
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between NEBRASKA and Oklahoma is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma 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 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 Nebraska Municipal i.e., Nebraska Municipal and Oklahoma Municipal go up and down completely randomly.
Pair Corralation between Nebraska Municipal and Oklahoma Municipal
Assuming the 90 days horizon Nebraska Municipal is expected to generate 1.2 times less return on investment than Oklahoma Municipal. But when comparing it to its historical volatility, Nebraska Municipal Fund is 1.05 times less risky than Oklahoma Municipal. It trades about 0.04 of its potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,008 in Oklahoma Municipal Fund on August 29, 2024 and sell it today you would earn a total of 58.00 from holding Oklahoma Municipal Fund or generate 5.75% 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. Oklahoma Municipal Fund
Performance |
| Timeline |
| Nebraska Municipal |
| Oklahoma Municipal |
Nebraska Municipal and Oklahoma Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and Oklahoma Municipal
The main advantage of trading using opposite Nebraska Municipal and Oklahoma Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal 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.| Nebraska Municipal vs. Virginia Bond Fund | Nebraska Municipal vs. HUMANA INC | Nebraska Municipal vs. Aquagold International | Nebraska Municipal vs. Barloworld Ltd ADR |
| Oklahoma Municipal vs. Hennessy Technology Fund | Oklahoma Municipal vs. Allianzgi Technology Fund | Oklahoma Municipal vs. Dreyfus Technology Growth | Oklahoma Municipal vs. Janus Global Technology |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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