Correlation Between California High-yield and American Funds
Can any of the company-specific risk be diversified away by investing in both California High-yield and American Funds 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 American Funds 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 American Funds Tax Exempt, you can compare the effects of market volatilities on California High-yield and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and American Funds.
Diversification Opportunities for California High-yield and American Funds
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between California and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and American Funds Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Tax 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Tax has no effect on the direction of California High-yield i.e., California High-yield and American Funds go up and down completely randomly.
Pair Corralation between California High-yield and American Funds
Assuming the 90 days horizon California High Yield Municipal is expected to generate 2.27 times more return on investment than American Funds. However, California High-yield is 2.27 times more volatile than American Funds Tax Exempt. It trades about 0.08 of its potential returns per unit of risk. American Funds Tax Exempt is currently generating about 0.1 per unit of risk. If you would invest 900.00 in California High Yield Municipal on September 5, 2024 and sell it today you would earn a total of 98.00 from holding California High Yield Municipal or generate 10.89% 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. American Funds Tax Exempt
Performance |
| Timeline |
| California High Yield |
| American Funds Tax |
California High-yield and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and American Funds
The main advantage of trading using opposite California High-yield and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| California High-yield vs. Oklahoma College Savings | California High-yield vs. Us Small Cap | California High-yield vs. Ab Small Cap | California High-yield vs. Champlain Small |
| American Funds vs. Lind Capital Partners | American Funds vs. Ab Impact Municipal | American Funds vs. California High Yield Municipal | American Funds vs. Federated Pennsylvania Municipal |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |