Correlation Between Galiano Gold and High-yield Municipal

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

Diversification Opportunities for Galiano Gold and High-yield Municipal

-0.04

Correlation Coefficient

Galiano Gold  High-yield Municipal

Good diversification

The 3 months correlation between Galiano and High-yield is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Galiano Gold 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 Galiano Gold 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 Galiano Gold 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 Galiano Gold i.e., Galiano Gold and High-yield Municipal go up and down completely randomly.

Pair Corralation between Galiano Gold and High-yield Municipal

Considering the 90-day investment horizon Galiano Gold is expected to generate 13.59 times more return on investment than High-yield Municipal. However, Galiano Gold is 13.59 times more volatile than High Yield Municipal Fund. It trades about 0.02 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about -0.01 per unit of risk. If you would invest  126.00  in Galiano Gold on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Galiano Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Galiano Gold  vs.  High Yield Municipal Fund

Galiano Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Galiano Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Galiano Gold is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

High Yield Municipal

Risk-Adjusted Performance

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.

Pair Trading with Galiano Gold and High-yield Municipal

The main advantage of trading using opposite Galiano Gold and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galiano Gold 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.

The idea behind Galiano Gold and High Yield Municipal Fund 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.