Correlation Between Maryland Tax-free and Federated Clover
Can any of the company-specific risk be diversified away by investing in both Maryland Tax-free and Federated Clover 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 Federated Clover 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 Federated Clover Small, you can compare the effects of market volatilities on Maryland Tax-free and Federated Clover 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 Federated Clover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maryland Tax-free and Federated Clover.
Diversification Opportunities for Maryland Tax-free and Federated Clover
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maryland and Federated is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Tax Free Bond and Federated Clover Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Clover Small 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 Federated Clover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Clover Small has no effect on the direction of Maryland Tax-free i.e., Maryland Tax-free and Federated Clover go up and down completely randomly.
Pair Corralation between Maryland Tax-free and Federated Clover
Assuming the 90 days horizon Maryland Tax-free is expected to generate 3.04 times less return on investment than Federated Clover. But when comparing it to its historical volatility, Maryland Tax Free Bond is 4.78 times less risky than Federated Clover. It trades about 0.08 of its potential returns per unit of risk. Federated Clover Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,285 in Federated Clover Small on August 30, 2024 and sell it today you would earn a total of 638.00 from holding Federated Clover Small or generate 27.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maryland Tax Free Bond vs. Federated Clover Small
Performance |
| Timeline |
| Maryland Tax Free |
| Federated Clover Small |
Maryland Tax-free and Federated Clover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maryland Tax-free and Federated Clover
The main advantage of trading using opposite Maryland Tax-free and Federated Clover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maryland Tax-free position performs unexpectedly, Federated Clover 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 Federated Clover will offset losses from the drop in Federated Clover's long position.| Maryland Tax-free vs. Maryland Tax Free Bond | Maryland Tax-free vs. HUMANA INC | Maryland Tax-free vs. Aquagold International | Maryland Tax-free vs. Barloworld Ltd ADR |
| Federated Clover vs. Touchstone Ohio Tax | Federated Clover vs. Oklahoma Municipal Fund | Federated Clover vs. Ambrus Core Bond | Federated Clover vs. Maryland Tax Free Bond |
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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