Correlation Between Nebraska Tax-free and Weitz Balanced

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

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

Diversification Opportunities for Nebraska Tax-free and Weitz Balanced

0.33

Correlation Coefficient

Nebraska Tax-free  Weitz Balanced

Weak diversification

The 3 months correlation between Nebraska and Weitz is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Tax Free Income and Weitz Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weitz Balanced and Nebraska 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 Nebraska Tax Free Income are associated (or correlated) with Weitz Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weitz Balanced has no effect on the direction of Nebraska Tax-free i.e., Nebraska Tax-free and Weitz Balanced go up and down completely randomly.

Pair Corralation between Nebraska Tax-free and Weitz Balanced

Assuming the 90 days horizon Nebraska Tax Free Income is expected to generate 0.37 times more return on investment than Weitz Balanced. However, Nebraska Tax Free Income is 2.73 times less risky than Weitz Balanced. It trades about 0.04 of its potential returns per unit of risk. Weitz Balanced is currently generating about 0.01 per unit of risk. If you would invest  954.00  in Nebraska Tax Free Income on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Nebraska Tax Free Income or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Nebraska Tax Free Income  vs.  Weitz Balanced

Nebraska Tax Free

Risk-Adjusted Performance

Insignificant

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

Weitz Balanced

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nebraska Tax-free and Weitz Balanced

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

The idea behind Nebraska Tax Free Income and Weitz Balanced 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.