Correlation Between Performance Trust and Morningstar Municipal
Can any of the company-specific risk be diversified away by investing in both Performance Trust and Morningstar 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 Performance Trust and Morningstar Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Trust Municipal and Morningstar Municipal Bond, you can compare the effects of market volatilities on Performance Trust and Morningstar 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 Performance Trust with a short position of Morningstar Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Trust and Morningstar Municipal.
Diversification Opportunities for Performance Trust and Morningstar Municipal
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Performance and Morningstar is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Performance Trust Municipal and Morningstar Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morningstar Municipal and Performance Trust 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 Performance Trust Municipal are associated (or correlated) with Morningstar Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morningstar Municipal has no effect on the direction of Performance Trust i.e., Performance Trust and Morningstar Municipal go up and down completely randomly.
Pair Corralation between Performance Trust and Morningstar Municipal
Assuming the 90 days horizon Performance Trust Municipal is expected to generate 1.35 times more return on investment than Morningstar Municipal. However, Performance Trust is 1.35 times more volatile than Morningstar Municipal Bond. It trades about 0.5 of its potential returns per unit of risk. Morningstar Municipal Bond is currently generating about 0.46 per unit of risk. If you would invest 2,162 in Performance Trust Municipal on July 23, 2025 and sell it today you would earn a total of 119.00 from holding Performance Trust Municipal or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Trust Municipal vs. Morningstar Municipal Bond
Performance |
| Timeline |
| Performance Trust |
| Morningstar Municipal |
Performance Trust and Morningstar Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Trust and Morningstar Municipal
The main advantage of trading using opposite Performance Trust and Morningstar Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Trust position performs unexpectedly, Morningstar 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 Morningstar Municipal will offset losses from the drop in Morningstar Municipal's long position.| Performance Trust vs. Performance Trust Municipal | Performance Trust vs. Dreyfus Intermediate Municipal | Performance Trust vs. Core Bond Series | Performance Trust vs. Pioneer Amt Free Municipal |
| Morningstar Municipal vs. Guidemark E Fixed | Morningstar Municipal vs. Franklin High Yield | Morningstar Municipal vs. Nuveen High Yield | Morningstar Municipal vs. Georgia Tax Free Bond |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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