Correlation Between Old Westbury and Maryland Tax-free
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Maryland Tax-free 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 Old Westbury and Maryland Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Municipal and Maryland Tax Free Bond, you can compare the effects of market volatilities on Old Westbury and Maryland Tax-free 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 Old Westbury with a short position of Maryland Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Maryland Tax-free.
Diversification Opportunities for Old Westbury and Maryland Tax-free
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Maryland is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Maryland Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Tax Free and Old Westbury 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 Old Westbury Municipal are associated (or correlated) with Maryland Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Tax Free has no effect on the direction of Old Westbury i.e., Old Westbury and Maryland Tax-free go up and down completely randomly.
Pair Corralation between Old Westbury and Maryland Tax-free
Assuming the 90 days horizon Old Westbury Municipal is expected to generate 0.77 times more return on investment than Maryland Tax-free. However, Old Westbury Municipal is 1.3 times less risky than Maryland Tax-free. It trades about 0.13 of its potential returns per unit of risk. Maryland Tax Free Bond is currently generating about -0.06 per unit of risk. If you would invest 1,142 in Old Westbury Municipal on November 3, 2024 and sell it today you would earn a total of 5.00 from holding Old Westbury Municipal or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Old Westbury Municipal vs. Maryland Tax Free Bond
Performance |
| Timeline |
| Old Westbury Municipal |
| Maryland Tax Free |
Old Westbury and Maryland Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Maryland Tax-free
The main advantage of trading using opposite Old Westbury and Maryland Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Maryland Tax-free 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 Maryland Tax-free will offset losses from the drop in Maryland Tax-free's long position.| Old Westbury vs. Rbb Fund | Old Westbury vs. Morningstar Global Income | Old Westbury vs. Dws Global Macro | Old Westbury vs. Ab Global Bond |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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