Correlation Between Oklahoma Municipal and Preferred Securities
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Preferred Securities 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 Oklahoma Municipal and Preferred Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oklahoma Municipal Fund and Preferred Securities Fund, you can compare the effects of market volatilities on Oklahoma Municipal and Preferred Securities 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 Oklahoma Municipal with a short position of Preferred Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Preferred Securities.
Diversification Opportunities for Oklahoma Municipal and Preferred Securities
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oklahoma and Preferred is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Preferred Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Securities and Oklahoma 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 Oklahoma Municipal Fund are associated (or correlated) with Preferred Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Securities has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Preferred Securities go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Preferred Securities
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 13.95 times less return on investment than Preferred Securities. In addition to that, Oklahoma Municipal is 1.75 times more volatile than Preferred Securities Fund. It trades about 0.01 of its total potential returns per unit of risk. Preferred Securities Fund is currently generating about 0.22 per unit of volatility. If you would invest 865.00 in Preferred Securities Fund on December 8, 2024 and sell it today you would earn a total of 68.00 from holding Preferred Securities Fund or generate 7.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Oklahoma Municipal Fund vs. Preferred Securities Fund
Performance |
Timeline |
Oklahoma Municipal |
Preferred Securities |
Oklahoma Municipal and Preferred Securities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oklahoma Municipal and Preferred Securities
The main advantage of trading using opposite Oklahoma Municipal and Preferred Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Preferred Securities 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 Preferred Securities will offset losses from the drop in Preferred Securities' long position.Oklahoma Municipal vs. Gabelli Gold Fund | ||
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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