Correlation Between National Tax and Bear Profund

Can any of the company-specific risk be diversified away by investing in both National Tax and Bear Profund 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 National Tax and Bear Profund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The National Tax Free and Bear Profund Bear, you can compare the effects of market volatilities on National Tax and Bear Profund 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 National Tax with a short position of Bear Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Bear Profund.

Diversification Opportunities for National Tax and Bear Profund

-0.07

Correlation Coefficient

National Tax  Bear Profund

Good diversification

The 3 months correlation between National and Bear is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Bear Profund Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bear Profund Bear and National Tax 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 The National Tax Free are associated (or correlated) with Bear Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bear Profund Bear has no effect on the direction of National Tax i.e., National Tax and Bear Profund go up and down completely randomly.

Pair Corralation between National Tax and Bear Profund

Assuming the 90 days horizon The National Tax Free is expected to under-perform the Bear Profund. But the mutual fund apears to be less risky and, when comparing its historical volatility, The National Tax Free is 3.25 times less risky than Bear Profund. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Bear Profund Bear is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,186  in Bear Profund Bear on September 22, 2024 and sell it today you would lose (18.00) from holding Bear Profund Bear or give up 1.52% of portfolio value over 90 days.

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

The National Tax Free  vs.  Bear Profund Bear

National Tax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bear Profund Bear

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with National Tax and Bear Profund

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

The idea behind The National Tax Free and Bear Profund Bear 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.