Correlation Between Tax-managed and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Tax-managed and Maine 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 Tax-managed and Maine Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Managed Large Cap and Maine Municipal Fund, you can compare the effects of market volatilities on Tax-managed and Maine 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 Tax-managed with a short position of Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-managed and Maine Municipal.
Diversification Opportunities for Tax-managed and Maine Municipal
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tax-managed and Maine is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Large Cap and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal and Tax-managed 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 Tax Managed Large Cap are associated (or correlated) with Maine Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maine Municipal has no effect on the direction of Tax-managed i.e., Tax-managed and Maine Municipal go up and down completely randomly.
Pair Corralation between Tax-managed and Maine Municipal
Assuming the 90 days horizon Tax Managed Large Cap is expected to under-perform the Maine Municipal. In addition to that, Tax-managed is 4.18 times more volatile than Maine Municipal Fund. It trades about -0.12 of its total potential returns per unit of risk. Maine Municipal Fund is currently generating about -0.37 per unit of volatility. If you would invest 962.00 in Maine Municipal Fund on October 9, 2024 and sell it today you would lose (16.00) from holding Maine Municipal Fund or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tax Managed Large Cap vs. Maine Municipal Fund
Performance |
| Timeline |
| Tax Managed Large |
| Maine Municipal |
Tax-managed and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax-managed and Maine Municipal
The main advantage of trading using opposite Tax-managed and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-managed position performs unexpectedly, Maine 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 Maine Municipal will offset losses from the drop in Maine Municipal's long position.| Tax-managed vs. International Developed Markets | Tax-managed vs. Global Real Estate | Tax-managed vs. Global Real Estate | Tax-managed vs. Global Real Estate |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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