Correlation Between Nebraska Municipal and Short Duration
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal and Short Duration 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 Short Duration 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 Short Duration Bond, you can compare the effects of market volatilities on Nebraska Municipal and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and Short Duration.
Diversification Opportunities for Nebraska Municipal and Short Duration
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEBRASKA and Short is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and Short Duration Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Bond 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Bond has no effect on the direction of Nebraska Municipal i.e., Nebraska Municipal and Short Duration go up and down completely randomly.
Pair Corralation between Nebraska Municipal and Short Duration
Assuming the 90 days horizon Nebraska Municipal Fund is expected to generate 3.73 times more return on investment than Short Duration. However, Nebraska Municipal is 3.73 times more volatile than Short Duration Bond. It trades about 0.18 of its potential returns per unit of risk. Short Duration Bond is currently generating about 0.07 per unit of risk. If you would invest 926.00 in Nebraska Municipal Fund on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Nebraska Municipal Fund or generate 1.51% 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. Short Duration Bond
Performance |
| Timeline |
| Nebraska Municipal |
| Short Duration Bond |
Nebraska Municipal and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and Short Duration
The main advantage of trading using opposite Nebraska Municipal and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's long position.| Nebraska Municipal vs. Colorado Bondshares A | Nebraska Municipal vs. Virginia Bond Fund | Nebraska Municipal vs. HUMANA INC | Nebraska Municipal vs. Aquagold International |
| Short Duration vs. Morningstar Municipal Bond | Short Duration vs. Franklin High Yield | Short Duration vs. Baird Strategic Municipal | Short Duration 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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