Correlation Between Municipal Bond and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Municipal Bond 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 Municipal Bond and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Bond Fund and Emerging Markets Portfolio, you can compare the effects of market volatilities on Municipal Bond 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 Municipal Bond with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Emerging Markets.
Diversification Opportunities for Municipal Bond and Emerging Markets
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Municipal and Emerging is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Fund and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Municipal 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 Municipal Bond Fund 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 Por has no effect on the direction of Municipal Bond i.e., Municipal Bond and Emerging Markets go up and down completely randomly.
Pair Corralation between Municipal Bond and Emerging Markets
If you would invest 808.00 in Municipal Bond Fund on November 8, 2024 and sell it today you would earn a total of 51.00 from holding Municipal Bond Fund or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Municipal Bond Fund vs. Emerging Markets Portfolio
Performance |
| Timeline |
| Municipal Bond |
| Emerging Markets Por |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Municipal Bond and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Emerging Markets
The main advantage of trading using opposite Municipal Bond and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond 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.| Municipal Bond vs. Franklin California High | Municipal Bond vs. Massmutual Premier High | Municipal Bond vs. Rbc Bluebay Global | Municipal Bond vs. T Rowe Price |
| Emerging Markets vs. World Energy Fund | Emerging Markets vs. Franklin Natural Resources | Emerging Markets vs. Clearbridge Energy Mlp | Emerging Markets vs. Short Oil Gas |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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