Correlation Between High-yield Municipal and Dell Technologies

Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Dell Technologies 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 Dell Technologies 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 Dell Technologies, you can compare the effects of market volatilities on High-yield Municipal and Dell Technologies 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 Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Dell Technologies.

Diversification Opportunities for High-yield Municipal and Dell Technologies

-0.32

Correlation Coefficient

High-yield Municipal  Dell Technologies

Very good diversification

The 3 months correlation between High-yield and Dell is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Dell Technologies go up and down completely randomly.

Pair Corralation between High-yield Municipal and Dell Technologies

Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.09 times more return on investment than Dell Technologies. However, High Yield Municipal Fund is 11.24 times less risky than Dell Technologies. It trades about -0.05 of its potential returns per unit of risk. Dell Technologies is currently generating about -0.1 per unit of risk. If you would invest  876.00  in High Yield Municipal Fund on December 29, 2024 and sell it today you would lose (7.00) from holding High Yield Municipal Fund or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

High Yield Municipal Fund  vs.  Dell Technologies

High Yield Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days High Yield Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. 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.

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with High-yield Municipal and Dell Technologies

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

The idea behind High Yield Municipal Fund and Dell Technologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.