Correlation Between Municipal Bond and Tactical Multi

Can any of the company-specific risk be diversified away by investing in both Municipal Bond and Tactical Multi 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 Tactical Multi 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 Tactical Multi Purpose Fund, you can compare the effects of market volatilities on Municipal Bond and Tactical Multi 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 Tactical Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Tactical Multi.

Diversification Opportunities for Municipal Bond and Tactical Multi

-0.69

Correlation Coefficient

Municipal Bond  Tactical Multi

Excellent diversification

The 3 months correlation between Municipal and Tactical is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Portfolio and Tactical Multi Purpose Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tactical Multi Purpose 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 Tactical Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tactical Multi Purpose has no effect on the direction of Municipal Bond i.e., Municipal Bond and Tactical Multi go up and down completely randomly.

Pair Corralation between Municipal Bond and Tactical Multi

Assuming the 90 days horizon Municipal Bond Portfolio is expected to under-perform the Tactical Multi. In addition to that, Municipal Bond is 2.96 times more volatile than Tactical Multi Purpose Fund. It trades about -0.03 of its total potential returns per unit of risk. Tactical Multi Purpose Fund is currently generating about 0.46 per unit of volatility. If you would invest  992.00  in Tactical Multi Purpose Fund on February 13, 2024 and sell it today you would earn a total of  11.00  from holding Tactical Multi Purpose Fund or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Municipal Bond Portfolio  vs.  Tactical Multi Purpose Fund

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.

Tactical Multi Purpose

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tactical Multi Purpose Fund are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Tactical Multi 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 Tactical Multi

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

The idea behind Municipal Bond Portfolio and Tactical Multi Purpose Fund 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.