Correlation Between Lind Capital and Maryland Tax-free

Can any of the company-specific risk be diversified away by investing in both Lind Capital and Maryland Tax-free 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 Lind Capital and Maryland Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lind Capital Partners and Maryland Tax Free Bond, you can compare the effects of market volatilities on Lind Capital and Maryland Tax-free 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 Lind Capital with a short position of Maryland Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lind Capital and Maryland Tax-free.

Diversification Opportunities for Lind Capital and Maryland Tax-free

0.87

Correlation Coefficient

Lind Capital  Maryland Tax-free

Very poor diversification

The 3 months correlation between Lind and Maryland is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lind Capital Partners and Maryland Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Tax Free and Lind Capital 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 Lind Capital Partners are associated (or correlated) with Maryland Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Tax Free has no effect on the direction of Lind Capital i.e., Lind Capital and Maryland Tax-free go up and down completely randomly.

Pair Corralation between Lind Capital and Maryland Tax-free

Assuming the 90 days horizon Lind Capital Partners is expected to under-perform the Maryland Tax-free. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lind Capital Partners is 1.05 times less risky than Maryland Tax-free. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Maryland Tax Free Bond is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Maryland Tax Free Bond on December 29, 2024 and sell it today you would lose (6.00) from holding Maryland Tax Free Bond or give up 0.6% of portfolio value over 90 days.

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

Lind Capital Partners  vs.  Maryland Tax Free Bond

Lind Capital Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lind Capital Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Lind Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Maryland Tax Free

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maryland Tax Free Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Maryland Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lind Capital and Maryland Tax-free

The main advantage of trading using opposite Lind Capital and Maryland Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lind Capital position performs unexpectedly, Maryland Tax-free 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 Maryland Tax-free will offset losses from the drop in Maryland Tax-free's long position.

The idea behind Lind Capital Partners and Maryland Tax Free Bond 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.