Correlation Between Munivest Fund and Central Securities

Can any of the company-specific risk be diversified away by investing in both Munivest Fund and Central Securities 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 Munivest Fund and Central Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Munivest Fund and Central Securities, you can compare the effects of market volatilities on Munivest Fund and Central Securities 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 Munivest Fund with a short position of Central Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Munivest Fund and Central Securities.

Diversification Opportunities for Munivest Fund and Central Securities

0.69

Correlation Coefficient

Munivest Fund  Central Securities

Poor diversification

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

Pair Corralation between Munivest Fund and Central Securities

Considering the 90-day investment horizon Munivest Fund is expected to generate 2.81 times less return on investment than Central Securities. But when comparing it to its historical volatility, Munivest Fund is 1.06 times less risky than Central Securities. It trades about 0.05 of its potential returns per unit of risk. Central Securities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,277  in Central Securities on July 30, 2024 and sell it today you would earn a total of  1,387  from holding Central Securities or generate 42.33% return on investment over 90 days.

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

Munivest Fund  vs.  Central Securities

Munivest Fund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Munivest Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Central Securities

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Securities are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Central Securities may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Munivest Fund and Central Securities

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

The idea behind Munivest Fund and Central Securities 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.