Correlation Between Municipal Bond and Chartwell Short

Can any of the company-specific risk be diversified away by investing in both Municipal Bond and Chartwell Short 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 Municipal Bond and Chartwell Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Municipal Bond Portfolio and Chartwell Short Duration, you can compare the effects of market volatilities on Municipal Bond and Chartwell Short 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 Municipal Bond with a short position of Chartwell Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Chartwell Short.

Diversification Opportunities for Municipal Bond and Chartwell Short

-0.45

Correlation Coefficient

Municipal Bond  Chartwell Short

Very good diversification

The 3 months correlation between Municipal and Chartwell is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Portfolio and Chartwell Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Short Duration and Municipal Bond 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 Municipal Bond Portfolio are associated (or correlated) with Chartwell Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Short Duration has no effect on the direction of Municipal Bond i.e., Municipal Bond and Chartwell Short go up and down completely randomly.

Pair Corralation between Municipal Bond and Chartwell Short

Assuming the 90 days horizon Municipal Bond Portfolio is expected to under-perform the Chartwell Short. But the mutual fund apears to be less risky and, when comparing its historical volatility, Municipal Bond Portfolio is 1.14 times less risky than Chartwell Short. The mutual fund trades about -0.27 of its potential returns per unit of risk. The Chartwell Short Duration is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  964.00  in Chartwell Short Duration on January 26, 2024 and sell it today you would earn a total of  2.00  from holding Chartwell Short Duration or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Municipal Bond Portfolio  vs.  Chartwell Short Duration

Municipal Bond Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chartwell Short Duration

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Short Duration are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Chartwell Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Municipal Bond and Chartwell Short

The main advantage of trading using opposite Municipal Bond and Chartwell Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond position performs unexpectedly, Chartwell Short 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 Chartwell Short will offset losses from the drop in Chartwell Short's long position.

The idea behind Municipal Bond Portfolio and Chartwell Short Duration 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.