Correlation Between High Yield and Embrace Change

Can any of the company-specific risk be diversified away by investing in both High Yield and Embrace Change 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 High Yield and Embrace Change into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for High Yield and Embrace Change

0.08

Correlation Coefficient

High Yield  Embrace Change

Significant diversification

The 3 months correlation between High and Embrace is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Embrace Change Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embrace Change Acqui and High Yield 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 High Yield Municipal Fund are associated (or correlated) with Embrace Change. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embrace Change Acqui has no effect on the direction of High Yield i.e., High Yield and Embrace Change go up and down completely randomly.

Pair Corralation between High Yield and Embrace Change

Assuming the 90 days horizon High Yield is expected to generate 2.47 times less return on investment than Embrace Change. In addition to that, High Yield is 2.17 times more volatile than Embrace Change Acquisition. It trades about 0.03 of its total potential returns per unit of risk. Embrace Change Acquisition is currently generating about 0.19 per unit of volatility. If you would invest  998.00  in Embrace Change Acquisition on February 12, 2024 and sell it today you would earn a total of  126.00  from holding Embrace Change Acquisition or generate 12.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.85%
Values	Daily Returns

High Yield Municipal Fund  vs.  Embrace Change Acquisition

High Yield Municipal

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Municipal Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Embrace Change Acqui

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Embrace Change is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with High Yield and Embrace Change

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

The idea behind High Yield Municipal Fund and Embrace Change Acquisition 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.