Correlation Between Oklahoma Municipal and American Beacon
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and American Beacon 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 American Beacon 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 American Beacon Shapiro, you can compare the effects of market volatilities on Oklahoma Municipal and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and American Beacon.
Diversification Opportunities for Oklahoma Municipal and American Beacon
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oklahoma and American is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and American Beacon go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and American Beacon
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 3.65 times less return on investment than American Beacon. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 2.7 times less risky than American Beacon. It trades about 0.22 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,100 in American Beacon Shapiro on September 1, 2024 and sell it today you would earn a total of 69.00 from holding American Beacon Shapiro or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. American Beacon Shapiro
Performance |
| Timeline |
| Oklahoma Municipal |
| American Beacon Shapiro |
Oklahoma Municipal and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and American Beacon
The main advantage of trading using opposite Oklahoma Municipal and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon'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 |
| American Beacon vs. Bbh Intermediate Municipal | American Beacon vs. Oklahoma Municipal Fund | American Beacon vs. T Rowe Price | American Beacon vs. Ab Bond Inflation |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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