Correlation Between High-yield Municipal and Dynamic Shares

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

Diversification Opportunities for High-yield Municipal and Dynamic Shares

0.0

Correlation Coefficient

High-yield Municipal  Dynamic Shares

Pay attention - limited upside

The 3 months correlation between High-yield and Dynamic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Dynamic Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Shares 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 Dynamic Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Shares has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Dynamic Shares go up and down completely randomly.

Pair Corralation between High-yield Municipal and Dynamic Shares

If you would invest (100.00) in Dynamic Shares on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Dynamic Shares or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

High Yield Municipal Fund  vs.  Dynamic Shares

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.

Dynamic Shares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynamic Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Dynamic Shares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with High-yield Municipal and Dynamic Shares

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

The idea behind High Yield Municipal Fund and Dynamic Shares 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.