Correlation Between California High and Federated Bond
Can any of the company-specific risk be diversified away by investing in both California High and Federated 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 California High and Federated Bond 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 Federated Bond Fund, you can compare the effects of market volatilities on California High and Federated 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 California High with a short position of Federated Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Federated Bond.
Diversification Opportunities for California High and Federated Bond
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Federated is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond and California High 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 Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of California High i.e., California High and Federated Bond go up and down completely randomly.
Pair Corralation between California High and Federated Bond
Assuming the 90 days horizon California High Yield Municipal is expected to generate 1.02 times more return on investment than Federated Bond. However, California High is 1.02 times more volatile than Federated Bond Fund. It trades about 0.06 of its potential returns per unit of risk. Federated Bond Fund is currently generating about 0.0 per unit of risk. If you would invest 987.00 in California High Yield Municipal on September 13, 2024 and sell it today you would earn a total of 8.00 from holding California High Yield Municipal or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
California High Yield Municipa vs. Federated Bond Fund
Performance |
| Timeline |
| California High Yield |
| Federated Bond |
California High and Federated Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and Federated Bond
The main advantage of trading using opposite California High and Federated Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Federated 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 Federated Bond will offset losses from the drop in Federated Bond's long position.| California High vs. Franklin Gold Precious | California High vs. Invesco Gold Special | California High vs. Great West Goldman Sachs | California High vs. Vy Goldman Sachs |
| Federated Bond vs. Federated Emerging Market | Federated Bond vs. Federated Mdt All | Federated Bond vs. Federated Mdt Balanced | Federated Bond vs. Federated Global Allocation |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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