Correlation Between Oklahoma Municipal and Target 2005
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Target 2005 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 Target 2005 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 Target 2005 Fund, you can compare the effects of market volatilities on Oklahoma Municipal and Target 2005 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 Target 2005. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Target 2005.
Diversification Opportunities for Oklahoma Municipal and Target 2005
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oklahoma and Target is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Target 2005 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 2005 Fund 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 Target 2005. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target 2005 Fund has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Target 2005 go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Target 2005
Assuming the 90 days horizon Oklahoma Municipal Fund is expected to generate 1.25 times more return on investment than Target 2005. However, Oklahoma Municipal is 1.25 times more volatile than Target 2005 Fund. It trades about 0.17 of its potential returns per unit of risk. Target 2005 Fund is currently generating about 0.17 per unit of risk. If you would invest 1,049 in Oklahoma Municipal Fund on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Oklahoma Municipal Fund or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Target 2005 Fund
Performance |
| Timeline |
| Oklahoma Municipal |
| Target 2005 Fund |
Oklahoma Municipal and Target 2005 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Target 2005
The main advantage of trading using opposite Oklahoma Municipal and Target 2005 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Target 2005 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 Target 2005 will offset losses from the drop in Target 2005's long position.| Oklahoma Municipal vs. Colorado Bondshares A | Oklahoma Municipal vs. Virginia Bond Fund | Oklahoma Municipal vs. HUMANA INC | Oklahoma Municipal vs. Aquagold International |
| Target 2005 vs. Oklahoma Municipal Fund | Target 2005 vs. Mirova Global Green | Target 2005 vs. California Bond Fund | Target 2005 vs. Blrc Sgy Mnp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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