Correlation Between Tax-exempt Bond and Enhanced
Can any of the company-specific risk be diversified away by investing in both Tax-exempt Bond and Enhanced 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-exempt Bond and Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Exempt Bond Fund and Enhanced Large Pany, you can compare the effects of market volatilities on Tax-exempt Bond and Enhanced 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-exempt Bond with a short position of Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-exempt Bond and Enhanced.
Diversification Opportunities for Tax-exempt Bond and Enhanced
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TAX-EXEMPT and Enhanced is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tax Exempt Bond Fund and Enhanced Large Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhanced Large Pany and Tax-exempt Bond 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 Exempt Bond Fund are associated (or correlated) with Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhanced Large Pany has no effect on the direction of Tax-exempt Bond i.e., Tax-exempt Bond and Enhanced go up and down completely randomly.
Pair Corralation between Tax-exempt Bond and Enhanced
Assuming the 90 days horizon Tax-exempt Bond is expected to generate 4.57 times less return on investment than Enhanced. But when comparing it to its historical volatility, Tax Exempt Bond Fund is 4.1 times less risky than Enhanced. It trades about 0.13 of its potential returns per unit of risk. Enhanced Large Pany is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,504 in Enhanced Large Pany on August 25, 2024 and sell it today you would earn a total of 42.00 from holding Enhanced Large Pany or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tax Exempt Bond Fund vs. Enhanced Large Pany
Performance |
| Timeline |
| Tax Exempt Bond |
| Enhanced Large Pany |
Tax-exempt Bond and Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax-exempt Bond and Enhanced
The main advantage of trading using opposite Tax-exempt Bond and Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-exempt Bond position performs unexpectedly, Enhanced 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 Enhanced will offset losses from the drop in Enhanced's long position.| Tax-exempt Bond vs. Nuveen All American Municipal | Tax-exempt Bond vs. T Rowe Price | Tax-exempt Bond vs. Bbh Intermediate Municipal | Tax-exempt Bond vs. Oklahoma Municipal Fund |
| Enhanced vs. Us Micro Cap | Enhanced vs. Dfa Short Term Government | Enhanced vs. Emerging Markets Small | Enhanced vs. Aquagold International |
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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