Correlation Between HYB and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both HYB and DWS 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 HYB and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYB and DWS Municipal Income, you can compare the effects of market volatilities on HYB and DWS 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 HYB with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYB and DWS Municipal.
Diversification Opportunities for HYB and DWS Municipal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HYB and DWS is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding HYB and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and HYB 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 HYB are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of HYB i.e., HYB and DWS Municipal go up and down completely randomly.
Pair Corralation between HYB and DWS Municipal
Considering the 90-day investment horizon HYB is expected to generate 2.18 times less return on investment than DWS Municipal. But when comparing it to its historical volatility, HYB is 1.47 times less risky than DWS Municipal. It trades about 0.04 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 925.00 in DWS Municipal Income on December 25, 2024 and sell it today you would earn a total of 15.00 from holding DWS Municipal Income or generate 1.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 66.1% |
Values | Daily Returns |
HYB vs. DWS Municipal Income
Performance |
Timeline |
HYB |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
DWS Municipal Income |
HYB and DWS Municipal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HYB and DWS Municipal
The main advantage of trading using opposite HYB and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYB position performs unexpectedly, DWS 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.HYB vs. Pioneer Municipal High | HYB vs. DWS Municipal Income | HYB vs. RiverNorth Specialty Finance | HYB vs. Putnam Managed Municipal |
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Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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