Correlation Between Pender Real and Oklahoma Municipal

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

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

Diversification Opportunities for Pender Real and Oklahoma Municipal

-0.36

Correlation Coefficient

Pender Real  Oklahoma Municipal

Very good diversification

The 3 months correlation between Pender and Oklahoma is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pender Real Estate and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma Municipal and Pender Real 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 Pender Real Estate are associated (or correlated) with Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of Pender Real i.e., Pender Real and Oklahoma Municipal go up and down completely randomly.

Pair Corralation between Pender Real and Oklahoma Municipal

Assuming the 90 days horizon Pender Real Estate is expected to under-perform the Oklahoma Municipal. In addition to that, Pender Real is 1.14 times more volatile than Oklahoma Municipal Fund. It trades about -0.03 of its total potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.4 per unit of volatility. If you would invest  1,055  in Oklahoma Municipal Fund on September 14, 2024 and sell it today you would earn a total of  11.00  from holding Oklahoma Municipal Fund or generate 1.04% return on investment over 90 days.

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

Pender Real Estate  vs.  Oklahoma Municipal Fund

Pender Real Estate

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pender Real Estate are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pender Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oklahoma Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oklahoma Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oklahoma 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 Pender Real and Oklahoma Municipal

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

The idea behind Pender Real Estate and Oklahoma 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.