Correlation Between HHG Capital and DTF Tax
Can any of the company-specific risk be diversified away by investing in both HHG Capital and DTF Tax 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 HHG Capital and DTF Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HHG Capital Corp and DTF Tax Free, you can compare the effects of market volatilities on HHG Capital and DTF Tax 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 HHG Capital with a short position of DTF Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of HHG Capital and DTF Tax.
Diversification Opportunities for HHG Capital and DTF Tax
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HHG and DTF is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding HHG Capital Corp and DTF Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTF Tax Free and HHG Capital 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 HHG Capital Corp are associated (or correlated) with DTF Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTF Tax Free has no effect on the direction of HHG Capital i.e., HHG Capital and DTF Tax go up and down completely randomly.
Pair Corralation between HHG Capital and DTF Tax
Assuming the 90 days horizon HHG Capital Corp is expected to under-perform the DTF Tax. But the stock apears to be less risky and, when comparing its historical volatility, HHG Capital Corp is 1.9 times less risky than DTF Tax. The stock trades about -0.21 of its potential returns per unit of risk. The DTF Tax Free is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,064 in DTF Tax Free on February 10, 2024 and sell it today you would earn a total of 28.00 from holding DTF Tax Free or generate 2.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
HHG Capital Corp vs. DTF Tax Free
Performance |
Timeline |
HHG Capital Corp |
DTF Tax Free |
HHG Capital and DTF Tax Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HHG Capital and DTF Tax
The main advantage of trading using opposite HHG Capital and DTF Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HHG Capital position performs unexpectedly, DTF Tax 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 DTF Tax will offset losses from the drop in DTF Tax's long position.The idea behind HHG Capital Corp and DTF Tax Free 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.DTF Tax vs. Pimco New York | DTF Tax vs. Pimco New York | DTF Tax vs. GAMCO Natural Resources | DTF Tax vs. Nuveen Pennsylvania Quality |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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