Correlation Between Maryland Tax-free and Barings Active
Can any of the company-specific risk be diversified away by investing in both Maryland Tax-free and Barings Active 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 Maryland Tax-free and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maryland Tax Free Bond and Barings Active Short, you can compare the effects of market volatilities on Maryland Tax-free and Barings Active 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 Maryland Tax-free with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maryland Tax-free and Barings Active.
Diversification Opportunities for Maryland Tax-free and Barings Active
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maryland and Barings is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Tax Free Bond and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short and Maryland 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 Maryland Tax Free Bond are associated (or correlated) with Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Maryland Tax-free i.e., Maryland Tax-free and Barings Active go up and down completely randomly.
Pair Corralation between Maryland Tax-free and Barings Active
Assuming the 90 days horizon Maryland Tax Free Bond is expected to generate 2.14 times more return on investment than Barings Active. However, Maryland Tax-free is 2.14 times more volatile than Barings Active Short. It trades about 0.07 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.14 per unit of risk. If you would invest 1,009 in Maryland Tax Free Bond on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Maryland Tax Free Bond or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maryland Tax Free Bond vs. Barings Active Short
Performance |
| Timeline |
| Maryland Tax Free |
| Barings Active Short |
Maryland Tax-free and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maryland Tax-free and Barings Active
The main advantage of trading using opposite Maryland Tax-free and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maryland Tax-free position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Maryland Tax-free vs. Fa 529 Aggressive | Maryland Tax-free vs. T Rowe Price | Maryland Tax-free vs. Arrow Managed Futures | Maryland Tax-free vs. Leggmason Partners Institutional |
| Barings Active vs. Versatile Bond Portfolio | Barings Active vs. Nuveen Minnesota Municipal | Barings Active vs. Ishares Municipal Bond | Barings Active vs. Multisector Bond Sma |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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