Correlation Between High Yield and Presidio Property

Can any of the company-specific risk be diversified away by investing in both High Yield and Presidio Property 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 and Presidio Property 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 Presidio Property Trust, you can compare the effects of market volatilities on High Yield and Presidio Property 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 with a short position of Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Presidio Property.

Diversification Opportunities for High Yield and Presidio Property

0.03

Correlation Coefficient

High Yield  Presidio Property

Significant diversification

The 3 months correlation between High and Presidio is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust and High Yield 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 Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of High Yield i.e., High Yield and Presidio Property go up and down completely randomly.

Pair Corralation between High Yield and Presidio Property

Assuming the 90 days horizon High Yield Municipal Fund is expected to under-perform the Presidio Property. But the mutual fund apears to be less risky and, when comparing its historical volatility, High Yield Municipal Fund is 4.87 times less risky than Presidio Property. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Presidio Property Trust is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,438  in Presidio Property Trust on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Presidio Property Trust or generate 0.14% return on investment over 90 days.

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

High Yield Municipal Fund  vs.  Presidio Property Trust

High Yield Municipal

Risk-Adjusted Performance

0 of 100

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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Presidio Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Presidio Property is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with High Yield and Presidio Property

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

The idea behind High Yield Municipal Fund and Presidio Property Trust 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.