Correlation Between Enhanced Fixed and California Bond
Can any of the company-specific risk be diversified away by investing in both Enhanced Fixed and California Bond 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 Enhanced Fixed and California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Fixed Income and California Bond Fund, you can compare the effects of market volatilities on Enhanced Fixed and California Bond 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 Enhanced Fixed with a short position of California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced Fixed and California Bond.
Diversification Opportunities for Enhanced Fixed and California Bond
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enhanced and California is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Fixed Income and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond and Enhanced Fixed 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 Enhanced Fixed Income are associated (or correlated) with California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Enhanced Fixed i.e., Enhanced Fixed and California Bond go up and down completely randomly.
Pair Corralation between Enhanced Fixed and California Bond
Assuming the 90 days horizon Enhanced Fixed Income is expected to generate 0.99 times more return on investment than California Bond. However, Enhanced Fixed Income is 1.01 times less risky than California Bond. It trades about 0.26 of its potential returns per unit of risk. California Bond Fund is currently generating about 0.07 per unit of risk. If you would invest 994.00 in Enhanced Fixed Income on October 30, 2024 and sell it today you would earn a total of 14.00 from holding Enhanced Fixed Income or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enhanced Fixed Income vs. California Bond Fund
Performance |
| Timeline |
| Enhanced Fixed Income |
| California Bond |
Enhanced Fixed and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhanced Fixed and California Bond
The main advantage of trading using opposite Enhanced Fixed and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced Fixed position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Enhanced Fixed vs. Calvert Conservative Allocation | Enhanced Fixed vs. Stone Ridge Diversified | Enhanced Fixed vs. Global Diversified Income | Enhanced Fixed vs. Valic Company I |
| California Bond vs. Income Fund Income | California Bond vs. Usaa Nasdaq 100 | California Bond vs. Victory Diversified Stock | California Bond vs. Intermediate Term Bond Fund |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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