Correlation Between California High-yield and Scout Core
Can any of the company-specific risk be diversified away by investing in both California High-yield and Scout Core 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 Scout Core 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 Scout E Bond, you can compare the effects of market volatilities on California High-yield and Scout Core 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 Scout Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Scout Core.
Diversification Opportunities for California High-yield and Scout Core
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Scout is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Scout E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scout E 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 Scout Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scout E Bond has no effect on the direction of California High-yield i.e., California High-yield and Scout Core go up and down completely randomly.
Pair Corralation between California High-yield and Scout Core
Assuming the 90 days horizon California High-yield is expected to generate 1.58 times less return on investment than Scout Core. But when comparing it to its historical volatility, California High Yield Municipal is 1.3 times less risky than Scout Core. It trades about 0.22 of its potential returns per unit of risk. Scout E Bond is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Scout E Bond on November 29, 2024 and sell it today you would earn a total of 19.00 from holding Scout E Bond or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Scout E Bond
Performance |
| Timeline |
| California High Yield |
| Scout E Bond |
California High-yield and Scout Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Scout Core
The main advantage of trading using opposite California High-yield and Scout Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Scout Core 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 Scout Core will offset losses from the drop in Scout Core's long position.| California High-yield vs. Mid Cap Value | California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Emerging Markets Fund |
| Scout Core vs. Hennessy Bp Energy | Scout Core vs. World Energy Fund | Scout Core vs. Fidelity Advisor Energy | Scout Core vs. Gamco Natural Resources |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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