Correlation Between Maryland Tax-free and Virtus Bond

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

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

Diversification Opportunities for Maryland Tax-free and Virtus Bond

0.72

Correlation Coefficient

Maryland Tax-free  Virtus Bond

Poor diversification

The 3 months correlation between Maryland and Virtus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Tax Free Bond and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond Fund and Maryland 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 Maryland Tax Free Bond are associated (or correlated) with Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Maryland Tax-free i.e., Maryland Tax-free and Virtus Bond go up and down completely randomly.

Pair Corralation between Maryland Tax-free and Virtus Bond

Assuming the 90 days horizon Maryland Tax-free is expected to generate 3.71 times less return on investment than Virtus Bond. But when comparing it to its historical volatility, Maryland Tax Free Bond is 1.13 times less risky than Virtus Bond. It trades about 0.05 of its potential returns per unit of risk. Virtus Bond Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  962.00  in Virtus Bond Fund on December 21, 2024 and sell it today you would earn a total of  22.00  from holding Virtus Bond Fund or generate 2.29% return on investment over 90 days.

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

Maryland Tax Free Bond  vs.  Virtus Bond Fund

Maryland Tax Free

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maryland 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 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.

Virtus Bond Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Bond Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maryland Tax-free and Virtus Bond

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

The idea behind Maryland Tax Free Bond and Virtus Bond 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..