Correlation Between California High and High Yield
Can any of the company-specific risk be diversified away by investing in both California High and High Yield 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 High Yield 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 High Yield Portfolio, you can compare the effects of market volatilities on California High and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and High Yield.
Diversification Opportunities for California High and High Yield
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between California and High is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and High Yield Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Portfolio 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Portfolio has no effect on the direction of California High i.e., California High and High Yield go up and down completely randomly.
Pair Corralation between California High and High Yield
Assuming the 90 days horizon California High Yield Municipal is expected to generate 0.8 times more return on investment than High Yield. However, California High Yield Municipal is 1.25 times less risky than High Yield. It trades about 0.2 of its potential returns per unit of risk. High Yield Portfolio is currently generating about -0.1 per unit of risk. If you would invest 984.00 in California High Yield Municipal on September 14, 2024 and sell it today you would earn a total of 7.00 from holding California High Yield Municipal or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. High Yield Portfolio
Performance |
| Timeline |
| California High Yield |
| High Yield Portfolio |
California High and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and High Yield
The main advantage of trading using opposite California High and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| California High vs. Copeland Risk Managed | California High vs. Franklin High Income | California High vs. Intal High Relative | California High vs. Western Asset High |
| High Yield vs. California High Yield Municipal | High Yield vs. Gamco Global Telecommunications | High Yield vs. Ab Impact Municipal | High Yield vs. Franklin High Yield |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |