Correlation Between California High-yield and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both California High-yield and Ishares Municipal 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 California High-yield and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Ishares Municipal Bond, you can compare the effects of market volatilities on California High-yield and Ishares Municipal 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 California High-yield with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Ishares Municipal.
Diversification Opportunities for California High-yield and Ishares Municipal
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between California and Ishares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and California 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 California High Yield Municipal are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of California High-yield i.e., California High-yield and Ishares Municipal go up and down completely randomly.
Pair Corralation between California High-yield and Ishares Municipal
Assuming the 90 days horizon California High Yield Municipal is expected to generate 1.1 times more return on investment than Ishares Municipal. However, California High-yield is 1.1 times more volatile than Ishares Municipal Bond. It trades about 0.07 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.08 per unit of risk. If you would invest 983.00 in California High Yield Municipal on September 3, 2024 and sell it today you would earn a total of 12.00 from holding California High Yield Municipal or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Ishares Municipal Bond
Performance |
| Timeline |
| California High Yield |
| Ishares Municipal Bond |
California High-yield and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Ishares Municipal
The main advantage of trading using opposite California High-yield and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| California High-yield vs. Volumetric Fund Volumetric | California High-yield vs. Abr 7525 Volatility | California High-yield vs. Qs Large Cap | California High-yield vs. Ab Value Fund |
| Ishares Municipal vs. Vanguard Long Term Tax Exempt | Ishares Municipal vs. Vanguard High Yield Tax Exempt | Ishares Municipal vs. Franklin Federal Tax Free | Ishares Municipal vs. Franklin Federal Tax Free |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |