Correlation Between NYSE Composite and Kentucky Tax-free
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Kentucky Tax-free 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 NYSE Composite and Kentucky Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Kentucky Tax Free Income, you can compare the effects of market volatilities on NYSE Composite and Kentucky Tax-free 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 NYSE Composite with a short position of Kentucky Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Kentucky Tax-free.
Diversification Opportunities for NYSE Composite and Kentucky Tax-free
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Kentucky is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Kentucky Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free and NYSE Composite 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 NYSE Composite are associated (or correlated) with Kentucky Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of NYSE Composite i.e., NYSE Composite and Kentucky Tax-free go up and down completely randomly.
Pair Corralation between NYSE Composite and Kentucky Tax-free
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.21 times more return on investment than Kentucky Tax-free. However, NYSE Composite is 2.21 times more volatile than Kentucky Tax Free Income. It trades about 0.24 of its potential returns per unit of risk. Kentucky Tax Free Income is currently generating about 0.11 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 66,978 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Kentucky Tax Free Income
Performance |
| Timeline |
NYSE Composite and Kentucky Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Kentucky Tax Free Income
Pair trading matchups for Kentucky Tax-free
Pair Trading with NYSE Composite and Kentucky Tax-free
The main advantage of trading using opposite NYSE Composite and Kentucky Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Kentucky Tax-free 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 Kentucky Tax-free will offset losses from the drop in Kentucky Tax-free's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Kentucky Tax-free vs. Kentucky Tax Free Short To Medium | Kentucky Tax-free vs. North Carolina Tax Free | Kentucky Tax-free vs. Intermediate Government Bond | Kentucky Tax-free vs. Taxable Municipal Bond |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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