Correlation Between Georgia Tax-free and Mondrian Global

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

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

Diversification Opportunities for Georgia Tax-free and Mondrian Global

0.41

Correlation Coefficient

Georgia Tax-free  Mondrian Global

Very weak diversification

The 3 months correlation between Georgia and Mondrian is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Tax Free Bond and Mondrian Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondrian Global Listed and Georgia Tax-free 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 Georgia Tax Free Bond are associated (or correlated) with Mondrian Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondrian Global Listed has no effect on the direction of Georgia Tax-free i.e., Georgia Tax-free and Mondrian Global go up and down completely randomly.

Pair Corralation between Georgia Tax-free and Mondrian Global

Assuming the 90 days horizon Georgia Tax-free is expected to generate 13.76 times less return on investment than Mondrian Global. But when comparing it to its historical volatility, Georgia Tax Free Bond is 2.83 times less risky than Mondrian Global. It trades about 0.04 of its potential returns per unit of risk. Mondrian Global Listed is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,007  in Mondrian Global Listed on December 21, 2024 and sell it today you would earn a total of  81.00  from holding Mondrian Global Listed or generate 8.04% return on investment over 90 days.

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

Georgia Tax Free Bond  vs.  Mondrian Global Listed

Georgia Tax Free

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Georgia Tax Free Bond are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Georgia Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mondrian Global Listed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mondrian Global Listed are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mondrian Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Georgia Tax-free and Mondrian Global

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

The idea behind Georgia Tax Free Bond and Mondrian Global Listed 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.