Correlation Between Nebraska Municipal and 1290 Gamco

Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal and 1290 Gamco 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 Nebraska Municipal and 1290 Gamco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nebraska Municipal Fund and 1290 Gamco Smallmid, you can compare the effects of market volatilities on Nebraska Municipal and 1290 Gamco 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 Nebraska Municipal with a short position of 1290 Gamco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and 1290 Gamco.

Diversification Opportunities for Nebraska Municipal and 1290 Gamco

-0.32

Correlation Coefficient

Nebraska Municipal  1290 Gamco

Very good diversification

The 3 months correlation between NEBRASKA and 1290 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and 1290 Gamco Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Gamco Smallmid and Nebraska 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 Nebraska Municipal Fund are associated (or correlated) with 1290 Gamco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Gamco Smallmid has no effect on the direction of Nebraska Municipal i.e., Nebraska Municipal and 1290 Gamco go up and down completely randomly.

Pair Corralation between Nebraska Municipal and 1290 Gamco

Assuming the 90 days horizon Nebraska Municipal Fund is expected to under-perform the 1290 Gamco. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nebraska Municipal Fund is 2.88 times less risky than 1290 Gamco. The mutual fund trades about -0.01 of its potential returns per unit of risk. The 1290 Gamco Smallmid is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,798  in 1290 Gamco Smallmid on August 30, 2024 and sell it today you would earn a total of  87.00  from holding 1290 Gamco Smallmid or generate 4.84% return on investment over 90 days.

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

Nebraska Municipal Fund  vs.  1290 Gamco Smallmid

Nebraska Municipal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nebraska Municipal Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nebraska Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

1290 Gamco Smallmid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 1290 Gamco Smallmid are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, 1290 Gamco may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Nebraska Municipal and 1290 Gamco

The main advantage of trading using opposite Nebraska Municipal and 1290 Gamco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal position performs unexpectedly, 1290 Gamco 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 1290 Gamco will offset losses from the drop in 1290 Gamco's long position.

The idea behind Nebraska Municipal Fund and 1290 Gamco Smallmid 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.