Correlation Between Oklahoma Municipal and Highland Merger
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Highland Merger 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 Highland Merger 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 Highland Merger Arbitrage, you can compare the effects of market volatilities on Oklahoma Municipal and Highland Merger 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 Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Highland Merger.
Diversification Opportunities for Oklahoma Municipal and Highland Merger
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oklahoma and Highland is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage 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 Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Highland Merger go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Highland Merger
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 2.16 times less return on investment than Highland Merger. In addition to that, Oklahoma Municipal is 1.79 times more volatile than Highland Merger Arbitrage. It trades about 0.05 of its total potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.17 per unit of volatility. If you would invest 1,845 in Highland Merger Arbitrage on August 29, 2024 and sell it today you would earn a total of 103.00 from holding Highland Merger Arbitrage or generate 5.58% 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. Highland Merger Arbitrage
Performance |
| Timeline |
| Oklahoma Municipal |
| Highland Merger Arbitrage |
Oklahoma Municipal and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Highland Merger
The main advantage of trading using opposite Oklahoma Municipal and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.The idea behind Oklahoma Municipal Fund and Highland Merger Arbitrage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Highland Merger vs. Vanguard Short Term Government | Highland Merger vs. Nuveen Minnesota Municipal | Highland Merger vs. Bbh Intermediate Municipal | Highland Merger vs. Oklahoma Municipal Fund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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