Correlation Between Oklahoma Municipal and Short Term

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

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

Diversification Opportunities for Oklahoma Municipal and Short Term

-0.32

Correlation Coefficient

Oklahoma Municipal  Short Term

Very good diversification

The 3 months correlation between Oklahoma and Short is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and The Short Term Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term and Oklahoma Municipal 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 Oklahoma Municipal Fund are associated (or correlated) with Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Short Term go up and down completely randomly.

Pair Corralation between Oklahoma Municipal and Short Term

Assuming the 90 days horizon Oklahoma Municipal Fund is expected to under-perform the Short Term. In addition to that, Oklahoma Municipal is 1.93 times more volatile than The Short Term Municipal. It trades about -0.02 of its total potential returns per unit of risk. The Short Term Municipal is currently generating about 0.28 per unit of volatility. If you would invest  954.00  in The Short Term Municipal on May 6, 2025 and sell it today you would earn a total of  11.00  from holding The Short Term Municipal or generate 1.15% return on investment over 90 days.

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

Oklahoma Municipal Fund  vs.  The Short Term Municipal

Oklahoma Municipal

Risk-Adjusted Performance

Very Weak

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

Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Short Term Municipal are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Short Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oklahoma Municipal and Short Term

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

The idea behind Oklahoma Municipal Fund and The Short Term Municipal 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.