Correlation Between William Blair and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both William Blair and High-yield 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 William Blair and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between William Blair Emerging and High Yield Municipal Fund, you can compare the effects of market volatilities on William Blair and High-yield 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 William Blair with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Blair and High-yield Municipal.
Diversification Opportunities for William Blair and High-yield Municipal
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between William and High-yield is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Emerging and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and William Blair 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 William Blair Emerging are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of William Blair i.e., William Blair and High-yield Municipal go up and down completely randomly.
Pair Corralation between William Blair and High-yield Municipal
Assuming the 90 days horizon William Blair Emerging is expected to generate 2.52 times more return on investment than High-yield Municipal. However, William Blair is 2.52 times more volatile than High Yield Municipal Fund. It trades about 0.06 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.07 per unit of risk. If you would invest 1,718 in William Blair Emerging on September 3, 2024 and sell it today you would earn a total of 388.00 from holding William Blair Emerging or generate 22.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
William Blair Emerging vs. High Yield Municipal Fund
Performance |
| Timeline |
| William Blair Emerging |
| High Yield Municipal |
William Blair and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Blair and High-yield Municipal
The main advantage of trading using opposite William Blair and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair position performs unexpectedly, High-yield 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| William Blair vs. Franklin Mutual Global | William Blair vs. Templeton Growth Fund | William Blair vs. Franklin Real Estate | William Blair vs. HUMANA INC |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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