Correlation Between New Jersey and New York
Can any of the company-specific risk be diversified away by investing in both New Jersey and New York 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 New Jersey and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Jersey Tax Free and New York Tax Free, you can compare the effects of market volatilities on New Jersey and New York 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 New Jersey with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Jersey and New York.
Diversification Opportunities for New Jersey and New York
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and New is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding New Jersey Tax Free and New York Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Tax and New Jersey 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 New Jersey Tax Free are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Tax has no effect on the direction of New Jersey i.e., New Jersey and New York go up and down completely randomly.
Pair Corralation between New Jersey and New York
Assuming the 90 days horizon New Jersey is expected to generate 1.32 times less return on investment than New York. But when comparing it to its historical volatility, New Jersey Tax Free is 1.34 times less risky than New York. It trades about 0.17 of its potential returns per unit of risk. New York Tax Free is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,074 in New York Tax Free on August 25, 2024 and sell it today you would earn a total of 15.00 from holding New York Tax Free or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Jersey Tax Free vs. New York Tax Free
Performance |
| Timeline |
| New Jersey Tax |
| New York Tax |
New Jersey and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Jersey and New York
The main advantage of trading using opposite New Jersey and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Jersey position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.| New Jersey vs. Vanguard New Jersey | New Jersey vs. Vanguard New Jersey | New Jersey vs. Franklin New Jersey | New Jersey vs. Fidelity New Jersey |
| New York vs. New Jersey Tax Free | New York vs. T Rowe Price | New York vs. Virginia Tax Free Bond | New York 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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