Correlation Between Urbana and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Urbana and DWS Municipal 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 Urbana and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urbana and DWS Municipal Income, you can compare the effects of market volatilities on Urbana and DWS Municipal 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 Urbana with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urbana and DWS Municipal.
Diversification Opportunities for Urbana and DWS Municipal
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Urbana and DWS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Urbana and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and Urbana 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 Urbana are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Urbana i.e., Urbana and DWS Municipal go up and down completely randomly.
Pair Corralation between Urbana and DWS Municipal
Assuming the 90 days horizon Urbana is expected to generate 2.5 times more return on investment than DWS Municipal. However, Urbana is 2.5 times more volatile than DWS Municipal Income. It trades about 0.06 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.09 per unit of risk. If you would invest 298.00 in Urbana on August 31, 2024 and sell it today you would earn a total of 105.00 from holding Urbana or generate 35.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.69% |
| Values | Daily Returns |
Urbana vs. DWS Municipal Income
Performance |
| Timeline |
| Urbana |
| DWS Municipal Income |
Urbana and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urbana and DWS Municipal
The main advantage of trading using opposite Urbana and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urbana position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Urbana vs. Blackhawk Growth Corp | Urbana vs. Guardian Capital Group | Urbana vs. Flow Capital Corp | Urbana vs. Princeton Capital |
| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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