Correlation Between Georgia Tax-free and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Georgia Tax-free and Emerging Markets 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 Georgia Tax-free and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Georgia Tax Free Bond and The Emerging Markets, you can compare the effects of market volatilities on Georgia Tax-free and Emerging Markets 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 Georgia Tax-free with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Tax-free and Emerging Markets.
Diversification Opportunities for Georgia Tax-free and Emerging Markets
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Georgia and Emerging is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Tax Free Bond and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Georgia Tax-free 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 Georgia Tax Free Bond are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Georgia Tax-free i.e., Georgia Tax-free and Emerging Markets go up and down completely randomly.
Pair Corralation between Georgia Tax-free and Emerging Markets
Assuming the 90 days horizon Georgia Tax Free Bond is expected to generate 0.33 times more return on investment than Emerging Markets. However, Georgia Tax Free Bond is 3.04 times less risky than Emerging Markets. It trades about -0.05 of its potential returns per unit of risk. The Emerging Markets is currently generating about -0.09 per unit of risk. If you would invest 1,100 in Georgia Tax Free Bond on October 31, 2024 and sell it today you would lose (14.00) from holding Georgia Tax Free Bond or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Georgia Tax Free Bond vs. The Emerging Markets
Performance |
| Timeline |
| Georgia Tax Free |
| Emerging Markets |
Georgia Tax-free and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Georgia Tax-free and Emerging Markets
The main advantage of trading using opposite Georgia Tax-free and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Tax-free position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Georgia Tax-free vs. Balanced Allocation Fund | Georgia Tax-free vs. Calvert Moderate Allocation | Georgia Tax-free vs. T Rowe Price | Georgia Tax-free vs. Franklin Moderate Allocation |
| Emerging Markets vs. The International Smaller | Emerging Markets vs. The International Smaller | Emerging Markets vs. The International Equity | Emerging Markets vs. The Eafe Pure |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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