Correlation Between Kentucky Tax and Mississippi Tax-free

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

By analyzing existing cross correlation between Kentucky Tax Free Short To Medium and Mississippi Tax Free Income, you can compare the effects of market volatilities on Kentucky Tax and Mississippi Tax-free 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 Kentucky Tax with a short position of Mississippi Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky Tax and Mississippi Tax-free.

Diversification Opportunities for Kentucky Tax and Mississippi Tax-free

0.92

Correlation Coefficient

Kentucky Tax  Mississippi Tax-free

Almost no diversification

The 3 months correlation between Kentucky and Mississippi is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Short To Med and Mississippi Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mississippi Tax Free and Kentucky 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 Kentucky Tax Free Short To Medium are associated (or correlated) with Mississippi Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mississippi Tax Free has no effect on the direction of Kentucky Tax i.e., Kentucky Tax and Mississippi Tax-free go up and down completely randomly.

Pair Corralation between Kentucky Tax and Mississippi Tax-free

Assuming the 90 days horizon Kentucky Tax is expected to generate 2.67 times less return on investment than Mississippi Tax-free. But when comparing it to its historical volatility, Kentucky Tax Free Short To Medium is 2.13 times less risky than Mississippi Tax-free. It trades about 0.15 of its potential returns per unit of risk. Mississippi Tax Free Income is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,101  in Mississippi Tax Free Income on September 1, 2024 and sell it today you would earn a total of  12.00  from holding Mississippi Tax Free Income or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Kentucky Tax Free Short To Med  vs.  Mississippi Tax Free Income

Kentucky Tax Free

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kentucky Tax Free Short To Medium are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Kentucky Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mississippi Tax Free

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mississippi Tax Free Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mississippi Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kentucky Tax and Mississippi Tax-free

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

The idea behind Kentucky Tax Free Short To Medium and Mississippi Tax Free Income 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.