Correlation Between Tax-exempt High and Moderate Strategy
Can any of the company-specific risk be diversified away by investing in both Tax-exempt High and Moderate Strategy 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 Tax-exempt High and Moderate Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Exempt High Yield and Moderate Strategy Fund, you can compare the effects of market volatilities on Tax-exempt High and Moderate Strategy 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 Tax-exempt High with a short position of Moderate Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-exempt High and Moderate Strategy.
Diversification Opportunities for Tax-exempt High and Moderate Strategy
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tax-exempt and Moderate is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tax Exempt High Yield and Moderate Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Strategy and Tax-exempt High 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 Tax Exempt High Yield are associated (or correlated) with Moderate Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Strategy has no effect on the direction of Tax-exempt High i.e., Tax-exempt High and Moderate Strategy go up and down completely randomly.
Pair Corralation between Tax-exempt High and Moderate Strategy
Assuming the 90 days horizon Tax-exempt High is expected to generate 2.47 times less return on investment than Moderate Strategy. But when comparing it to its historical volatility, Tax Exempt High Yield is 1.19 times less risky than Moderate Strategy. It trades about 0.04 of its potential returns per unit of risk. Moderate Strategy Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 836.00 in Moderate Strategy Fund on June 5, 2025 and sell it today you would earn a total of 183.00 from holding Moderate Strategy Fund or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Tax Exempt High Yield vs. Moderate Strategy Fund
Performance |
| Timeline |
| Tax Exempt High |
| Moderate Strategy |
Tax-exempt High and Moderate Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax-exempt High and Moderate Strategy
The main advantage of trading using opposite Tax-exempt High and Moderate Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-exempt High position performs unexpectedly, Moderate Strategy 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 Moderate Strategy will offset losses from the drop in Moderate Strategy's long position.| Tax-exempt High vs. International Developed Markets | Tax-exempt High vs. Global Real Estate | Tax-exempt High vs. Global Real Estate | Tax-exempt High vs. Global Real Estate |
| Moderate Strategy vs. Voya Target Retirement | Moderate Strategy vs. Dimensional Retirement Income | Moderate Strategy vs. Voya Target Retirement | Moderate Strategy vs. Sa Worldwide Moderate |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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