Correlation Between Federated Ohio and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Federated Ohio and Ishares Municipal 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 Federated Ohio and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Ohio Municipal and Ishares Municipal Bond, you can compare the effects of market volatilities on Federated Ohio and Ishares Municipal 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 Federated Ohio with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ohio and Ishares Municipal.
Diversification Opportunities for Federated Ohio and Ishares Municipal
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FEDERATED and Ishares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ohio Municipal and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Federated Ohio 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 Federated Ohio Municipal are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Federated Ohio i.e., Federated Ohio and Ishares Municipal go up and down completely randomly.
Pair Corralation between Federated Ohio and Ishares Municipal
Assuming the 90 days horizon Federated Ohio Municipal is expected to generate 0.93 times more return on investment than Ishares Municipal. However, Federated Ohio Municipal is 1.07 times less risky than Ishares Municipal. It trades about 0.06 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.06 per unit of risk. If you would invest 984.00 in Federated Ohio Municipal on August 31, 2024 and sell it today you would earn a total of 66.00 from holding Federated Ohio Municipal or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ohio Municipal vs. Ishares Municipal Bond
Performance |
| Timeline |
| Federated Ohio Municipal |
| Ishares Municipal Bond |
Federated Ohio and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ohio and Ishares Municipal
The main advantage of trading using opposite Federated Ohio and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ohio position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Federated Ohio vs. Vanguard Ohio Long Term | Federated Ohio vs. Franklin Ohio Tax Free | Federated Ohio vs. Fidelity Ohio Municipal | Federated Ohio vs. HUMANA INC |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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