Correlation Between Oklahoma Municipal and Jensen Quality
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Jensen Quality 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 Jensen Quality 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 Jensen Quality Value, you can compare the effects of market volatilities on Oklahoma Municipal and Jensen Quality 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 Jensen Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Jensen Quality.
Diversification Opportunities for Oklahoma Municipal and Jensen Quality
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Oklahoma and Jensen is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Jensen Quality Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Quality Value 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 Jensen Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Quality Value has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Jensen Quality go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Jensen Quality
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 6.51 times less return on investment than Jensen Quality. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 3.58 times less risky than Jensen Quality. It trades about 0.03 of its potential returns per unit of risk. Jensen Quality Value is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,610 in Jensen Quality Value on September 1, 2024 and sell it today you would earn a total of 374.00 from holding Jensen Quality Value or generate 23.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Jensen Quality Value
Performance |
| Timeline |
| Oklahoma Municipal |
| Jensen Quality Value |
Oklahoma Municipal and Jensen Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Jensen Quality
The main advantage of trading using opposite Oklahoma Municipal and Jensen Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Jensen Quality 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 Jensen Quality will offset losses from the drop in Jensen Quality'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 |
| Jensen Quality vs. The Jensen Portfolio | Jensen Quality vs. The Jensen Portfolio | Jensen Quality vs. The Jensen Portfolio | Jensen Quality vs. The Jensen Portfolio |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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