Correlation Between Oklahoma Municipal and Federated Government
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Federated 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 Federated 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 Federated Government Ultrashort, you can compare the effects of market volatilities on Oklahoma Municipal and Federated 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 Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Federated Government.
Diversification Opportunities for Oklahoma Municipal and Federated Government
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oklahoma and Federated is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Federated Government go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Federated Government
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 2.64 times less return on investment than Federated Government. In addition to that, Oklahoma Municipal is 2.29 times more volatile than Federated Government Ultrashort. It trades about 0.03 of its total potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.19 per unit of volatility. If you would invest 892.00 in Federated Government Ultrashort on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Federated Government Ultrashort or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Federated Government Ultrashor
Performance |
| Timeline |
| Oklahoma Municipal |
| Federated Government |
Oklahoma Municipal and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Federated Government
The main advantage of trading using opposite Oklahoma Municipal and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Federated 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 Federated Government will offset losses from the drop in Federated Government's long position.| Oklahoma Municipal vs. Mesirow Financial Small | Oklahoma Municipal vs. Transamerica Financial Life | Oklahoma Municipal vs. 1919 Financial Services | Oklahoma Municipal vs. Angel Oak Financial |
| Federated Government vs. Federated Emerging Market | Federated Government vs. Federated Mdt All | Federated Government vs. Federated Mdt Balanced | Federated Government vs. Federated Global Allocation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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