Correlation Between NYSE Composite and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Municipal Bond 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 Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Municipal Bond Fund, you can compare the effects of market volatilities on NYSE Composite and Municipal Bond 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 Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Municipal Bond.
Diversification Opportunities for NYSE Composite and Municipal Bond
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Municipal is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond 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 Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of NYSE Composite i.e., NYSE Composite and Municipal Bond go up and down completely randomly.
Pair Corralation between NYSE Composite and Municipal Bond
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.98 times more return on investment than Municipal Bond. However, NYSE Composite is 1.98 times more volatile than Municipal Bond Fund. It trades about 0.3 of its potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.22 per unit of risk. If you would invest 1,941,627 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 85,577 from holding NYSE Composite or generate 4.41% 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. Municipal Bond Fund
Performance |
| Timeline |
NYSE Composite and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Municipal Bond Fund
Pair trading matchups for Municipal Bond
Pair Trading with NYSE Composite and Municipal Bond
The main advantage of trading using opposite NYSE Composite and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Municipal Bond vs. Vanguard Long Term Tax Exempt | Municipal Bond vs. Vanguard High Yield Tax Exempt | Municipal Bond vs. Vanguard High Yield Tax Exempt | Municipal Bond vs. Strategic Advisers Municipal |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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