Correlation Between Usaa Virginia and Nebraska Municipal
Can any of the company-specific risk be diversified away by investing in both Usaa Virginia and Nebraska 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 Usaa Virginia and Nebraska Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Usaa Virginia Bond and Nebraska Municipal Fund, you can compare the effects of market volatilities on Usaa Virginia and Nebraska 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 Usaa Virginia with a short position of Nebraska Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usaa Virginia and Nebraska Municipal.
Diversification Opportunities for Usaa Virginia and Nebraska Municipal
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Usaa and Nebraska is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Usaa Virginia Bond and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska Municipal and Usaa Virginia 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 Usaa Virginia Bond are associated (or correlated) with Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Usaa Virginia i.e., Usaa Virginia and Nebraska Municipal go up and down completely randomly.
Pair Corralation between Usaa Virginia and Nebraska Municipal
Assuming the 90 days horizon Usaa Virginia Bond is expected to generate 1.3 times more return on investment than Nebraska Municipal. However, Usaa Virginia is 1.3 times more volatile than Nebraska Municipal Fund. It trades about 0.04 of its potential returns per unit of risk. Nebraska Municipal Fund is currently generating about 0.01 per unit of risk. If you would invest 987.00 in Usaa Virginia Bond on November 2, 2024 and sell it today you would earn a total of 58.00 from holding Usaa Virginia Bond or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Usaa Virginia Bond vs. Nebraska Municipal Fund
Performance |
| Timeline |
| Usaa Virginia Bond |
| Nebraska Municipal |
Usaa Virginia and Nebraska Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Usaa Virginia and Nebraska Municipal
The main advantage of trading using opposite Usaa Virginia and Nebraska Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usaa Virginia position performs unexpectedly, Nebraska 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 Nebraska Municipal will offset losses from the drop in Nebraska Municipal's long position.The idea behind Usaa Virginia Bond and Nebraska Municipal Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nebraska Municipal vs. Commonwealth Global Fund | Nebraska Municipal vs. Barings Global Floating | Nebraska Municipal vs. Rbb Fund | Nebraska Municipal vs. Qs Global Equity |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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