Tax Exempt Correlations

Mutual Funds . USA . 
Fund . Tax Exempt Bond
AFTFX Fund  USD 12.00  0.03  0.25%   
The current 90-days correlation between Tax Exempt Bond and Franklin Federal Tax Free is 0.97 (i.e., Almost no diversification). The correlation of Tax Exempt is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak. If the correlation is 0, the equities are not correlated; they are entirely random.

Tax Exempt Correlation With Market

Average diversification

The correlation between Tax Exempt Bond and DJI is 0.19 (i.e., Average diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Tax Exempt Bond and DJI in the same portfolio, assuming nothing else is changed.
  
Check out Trending Equities to better understand how to build diversified portfolios, which includes a position in Tax Exempt Bond. Also, note that the market value of any mutual fund could be closely tied with the direction of predictive economic indicators such as signals in census.

Moving together with Tax Mutual Fund

  0.67AMECX Income FundPairCorr
  0.67RNEBX New World FundPairCorr
  0.67AMFCX American MutualPairCorr
  0.67AMFFX American MutualPairCorr
  0.69RNCCX American Funds IncomePairCorr
  0.61FPPPX American Funds PresePairCorr
  0.67AMEFX Income FundPairCorr
  0.66RNGGX New Economy FundPairCorr
  0.66RNGFX New Economy FundPairCorr
  0.66RNGHX New Economy FundPairCorr
  0.66RNGEX New Economy FundPairCorr
  0.97AMHIX American High IncomePairCorr
  1.0TEBCX Tax Exempt BondPairCorr
  0.81TECCX Tax Exempt FundPairCorr
  1.0TEAFX Tax Exempt BondPairCorr
  0.68FPTPX American Funds ConsePairCorr
  0.85TECFX Tax Exempt FundPairCorr
  0.98TEFEX Tax Exempt FundPairCorr
  0.67AMPCX Amcap Fund ClassPairCorr
  0.67AMPFX Amcap Fund ClassPairCorr
  0.67RNPAX New PerspectivePairCorr
  0.67RNPHX New PerspectivePairCorr
  0.67RNPGX New PerspectivePairCorr
  0.67AMRMX American MutualPairCorr
  0.67AMRFX American MutualPairCorr
  0.69TEPAX American Funds TaxPairCorr
  0.71TEPFX American Funds TaxPairCorr

Related Correlations Analysis

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Risk-Adjusted Indicators

There is a big difference between Tax Mutual Fund performing well and Tax Exempt Mutual Fund doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze Tax Exempt's multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.

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