Correlation Between Teton Convertible and American High-income

Can any of the company-specific risk be diversified away by investing in both Teton Convertible and American High-income 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 Teton Convertible and American High-income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teton Vertible Securities and American High Income Municipal, you can compare the effects of market volatilities on Teton Convertible and American High-income 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 Teton Convertible with a short position of American High-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teton Convertible and American High-income.

Diversification Opportunities for Teton Convertible and American High-income

0.19

Correlation Coefficient

Teton Convertible  American High-income

Average diversification

The 3 months correlation between Teton and American is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Teton Vertible Securities and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Teton Convertible 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 Teton Vertible Securities are associated (or correlated) with American High-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Teton Convertible i.e., Teton Convertible and American High-income go up and down completely randomly.

Pair Corralation between Teton Convertible and American High-income

Assuming the 90 days horizon Teton Vertible Securities is expected to generate 2.93 times more return on investment than American High-income. However, Teton Convertible is 2.93 times more volatile than American High Income Municipal. It trades about -0.11 of its potential returns per unit of risk. American High Income Municipal is currently generating about -0.37 per unit of risk. If you would invest  1,503  in Teton Vertible Securities on October 9, 2024 and sell it today you would lose (27.00) from holding Teton Vertible Securities or give up 1.8% of portfolio value over 90 days.

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

Teton Vertible Securities  vs.  American High Income Municipal

Teton Vertible Securities

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teton Vertible Securities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Teton Convertible may actually be approaching a critical reversion point that can send shares even higher in February 2025.

American High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American High Income Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, American High-income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teton Convertible and American High-income

The main advantage of trading using opposite Teton Convertible and American High-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teton Convertible position performs unexpectedly, American High-income 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 American High-income will offset losses from the drop in American High-income's long position.

The idea behind Teton Vertible Securities and American High Income Municipal 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.