Correlation Between Oklahoma Municipal and Short Term
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Short Term 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 Short Term 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 Short Term Municipal Bond, you can compare the effects of market volatilities on Oklahoma Municipal and Short Term 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 Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Short Term.
Diversification Opportunities for Oklahoma Municipal and Short Term
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Oklahoma and Short is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Short Term Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Municipal 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Municipal has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Short Term go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Short Term
Assuming the 90 days horizon Oklahoma Municipal Fund is expected to generate 2.12 times more return on investment than Short Term. However, Oklahoma Municipal is 2.12 times more volatile than Short Term Municipal Bond. It trades about 0.4 of its potential returns per unit of risk. Short Term Municipal Bond is currently generating about 0.25 per unit of risk. If you would invest 1,055 in Oklahoma Municipal Fund on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Oklahoma Municipal Fund or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Short Term Municipal Bond
Performance |
| Timeline |
| Oklahoma Municipal |
| Short Term Municipal |
Oklahoma Municipal and Short Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Short Term
The main advantage of trading using opposite Oklahoma Municipal and Short Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Short Term 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 Short Term will offset losses from the drop in Short Term's long position.| Oklahoma Municipal vs. Gamco Natural Resources | Oklahoma Municipal vs. Fidelity Advisor Energy | Oklahoma Municipal vs. Jennison Natural Resources | Oklahoma Municipal vs. Franklin Natural Resources |
| Short Term vs. Kinetics Market Opportunities | Short Term vs. Investec Emerging Markets | Short Term vs. Ep Emerging Markets | Short Term vs. T Rowe Price |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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