Correlation Between California High and Optimum Small
Can any of the company-specific risk be diversified away by investing in both California High and Optimum Small 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 Optimum Small 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 Optimum Small Mid Cap, you can compare the effects of market volatilities on California High and Optimum Small 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 Optimum Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Optimum Small.
Diversification Opportunities for California High and Optimum Small
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between California and Optimum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid 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 Optimum Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of California High i.e., California High and Optimum Small go up and down completely randomly.
Pair Corralation between California High and Optimum Small
Assuming the 90 days horizon California High is expected to generate 2.19 times less return on investment than Optimum Small. But when comparing it to its historical volatility, California High Yield Municipal is 5.61 times less risky than Optimum Small. It trades about 0.1 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,313 in Optimum Small Mid Cap on September 14, 2024 and sell it today you would earn a total of 68.00 from holding Optimum Small Mid Cap or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Optimum Small Mid Cap
Performance |
| Timeline |
| California High Yield |
| Optimum Small Mid |
California High and Optimum Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and Optimum Small
The main advantage of trading using opposite California High and Optimum Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Optimum Small 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 Optimum Small will offset losses from the drop in Optimum Small'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 |
| Optimum Small vs. Delaware Value Fund | Optimum Small vs. Delaware Reit Fund | Optimum Small vs. Aquagold International | Optimum Small vs. Morningstar Unconstrained 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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