Correlation Between High-yield Municipal and Boohoo PLC

Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Boohoo PLC 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 High-yield Municipal and Boohoo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between High Yield Municipal Fund and BoohooCom PLC ADR, you can compare the effects of market volatilities on High-yield Municipal and Boohoo PLC 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 High-yield Municipal with a short position of Boohoo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Boohoo PLC.

Diversification Opportunities for High-yield Municipal and Boohoo PLC

0.01

Correlation Coefficient

High-yield Municipal  Boohoo PLC

Significant diversification

The 3 months correlation between High-yield and Boohoo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and BoohooCom PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BoohooCom PLC ADR and High-yield Municipal 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 High Yield Municipal Fund are associated (or correlated) with Boohoo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BoohooCom PLC ADR has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Boohoo PLC go up and down completely randomly.

Pair Corralation between High-yield Municipal and Boohoo PLC

Assuming the 90 days horizon High-yield Municipal is expected to generate 10.47 times less return on investment than Boohoo PLC. But when comparing it to its historical volatility, High Yield Municipal Fund is 4.37 times less risky than Boohoo PLC. It trades about 0.07 of its potential returns per unit of risk. BoohooCom PLC ADR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  712.00  in BoohooCom PLC ADR on September 4, 2024 and sell it today you would earn a total of  109.00  from holding BoohooCom PLC ADR or generate 15.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

High Yield Municipal Fund  vs.  BoohooCom PLC ADR

High Yield Municipal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Municipal Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, High-yield Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BoohooCom PLC ADR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BoohooCom PLC ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Boohoo PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with High-yield Municipal and Boohoo PLC

The main advantage of trading using opposite High-yield Municipal and Boohoo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Boohoo PLC 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 Boohoo PLC will offset losses from the drop in Boohoo PLC's long position.

The idea behind High Yield Municipal Fund and BoohooCom PLC ADR 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.