Correlation Between New York and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both New York and High-yield 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 New York and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Mortgage and High Yield Municipal Fund, you can compare the effects of market volatilities on New York and High-yield 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 New York with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and High-yield Municipal.
Diversification Opportunities for New York and High-yield Municipal
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and High-yield is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and New York 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 York Mortgage are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of New York i.e., New York and High-yield Municipal go up and down completely randomly.
Pair Corralation between New York and High-yield Municipal
Assuming the 90 days horizon New York Mortgage is expected to generate 0.63 times more return on investment than High-yield Municipal. However, New York Mortgage is 1.59 times less risky than High-yield Municipal. It trades about 0.35 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.14 per unit of risk. If you would invest 2,465 in New York Mortgage on August 24, 2024 and sell it today you would earn a total of 47.00 from holding New York Mortgage or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. High Yield Municipal Fund
Performance |
| Timeline |
| New York Mortgage |
| High Yield Municipal |
New York and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and High-yield Municipal
The main advantage of trading using opposite New York and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York position performs unexpectedly, High-yield 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| New York vs. New York Mortgage | New York vs. AGNC Investment Corp | New York vs. Chimera Investment | New York vs. AGNC Investment Corp |
| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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