Correlation Between Oklahoma Municipal and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Pacific Funds 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 Pacific Funds 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 Pacific Funds Strategic, you can compare the effects of market volatilities on Oklahoma Municipal and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Pacific Funds.
Diversification Opportunities for Oklahoma Municipal and Pacific Funds
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oklahoma and Pacific is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Pacific Funds Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Strategic 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Strategic has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Pacific Funds go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Pacific Funds
Assuming the 90 days horizon Oklahoma Municipal Fund is expected to generate 2.18 times more return on investment than Pacific Funds. However, Oklahoma Municipal is 2.18 times more volatile than Pacific Funds Strategic. It trades about -0.02 of its potential returns per unit of risk. Pacific Funds Strategic is currently generating about -0.08 per unit of risk. If you would invest 1,069 in Oklahoma Municipal Fund on August 30, 2024 and sell it today you would lose (3.00) from holding Oklahoma Municipal Fund or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Pacific Funds Strategic
Performance |
| Timeline |
| Oklahoma Municipal |
| Pacific Funds Strategic |
Oklahoma Municipal and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Pacific Funds
The main advantage of trading using opposite Oklahoma Municipal and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Oklahoma Municipal vs. Western Asset Municipal | Oklahoma Municipal vs. Intermediate Term Bond Fund | Oklahoma Municipal vs. Multisector Bond Sma | Oklahoma Municipal vs. Legg Mason Bw |
| Pacific Funds vs. Nuveen Minnesota Municipal | Pacific Funds vs. Oklahoma Municipal Fund | Pacific Funds vs. Transamerica Intermediate Muni | Pacific Funds vs. California High Yield Municipal |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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