Correlation Between Oklahoma Municipal and Federated Clover
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Federated Clover 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 Federated Clover 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 Federated Clover Small, you can compare the effects of market volatilities on Oklahoma Municipal and Federated Clover 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 Federated Clover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Federated Clover.
Diversification Opportunities for Oklahoma Municipal and Federated Clover
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oklahoma and Federated is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Federated Clover Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Clover Small 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 Federated Clover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Clover Small has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Federated Clover go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Federated Clover
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 5.36 times less return on investment than Federated Clover. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 4.94 times less risky than Federated Clover. It trades about 0.04 of its potential returns per unit of risk. Federated Clover Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,285 in Federated Clover Small on August 30, 2024 and sell it today you would earn a total of 638.00 from holding Federated Clover Small or generate 27.92% 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. Federated Clover Small
Performance |
| Timeline |
| Oklahoma Municipal |
| Federated Clover Small |
Oklahoma Municipal and Federated Clover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Federated Clover
The main advantage of trading using opposite Oklahoma Municipal and Federated Clover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Federated Clover 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 Federated Clover will offset losses from the drop in Federated Clover's long position.| Oklahoma Municipal vs. Virginia Bond Fund | Oklahoma Municipal vs. HUMANA INC | Oklahoma Municipal vs. Aquagold International | Oklahoma Municipal vs. Barloworld Ltd ADR |
| Federated Clover vs. Touchstone Ohio Tax | Federated Clover vs. Oklahoma Municipal Fund | Federated Clover vs. Ambrus Core Bond | Federated Clover vs. Maryland Tax Free Bond |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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