Correlation Between Oklahoma Municipal and Us Government
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Us Government 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 Oklahoma Municipal and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oklahoma Municipal Fund and Us Government Securities, you can compare the effects of market volatilities on Oklahoma Municipal and Us Government 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 Oklahoma Municipal with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Us Government.
Diversification Opportunities for Oklahoma Municipal and Us Government
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oklahoma and CGTAX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Oklahoma 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 Oklahoma Municipal Fund are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Us Government go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Us Government
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 2.58 times less return on investment than Us Government. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 1.58 times less risky than Us Government. It trades about 0.02 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,168 in Us Government Securities on September 3, 2024 and sell it today you would earn a total of 26.00 from holding Us Government Securities or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Us Government Securities
Performance |
| Timeline |
| Oklahoma Municipal |
| Us Government Securities |
Oklahoma Municipal and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Us Government
The main advantage of trading using opposite Oklahoma Municipal and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Oklahoma Municipal vs. Limited Term Tax | Oklahoma Municipal vs. Calvert Short Duration | Oklahoma Municipal vs. Federated Short Term Income | Oklahoma Municipal vs. Jhancock Short Duration |
| Us Government vs. Matson Money Equity | Us Government vs. Elfun Government Money | Us Government vs. Blackrock Exchange Portfolio | Us Government vs. General Money Market |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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