Correlation Between Calvert High and California Municipal
Can any of the company-specific risk be diversified away by investing in both Calvert High and California Municipal 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 Calvert High and California Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert High Yield and California Municipal Portfolio, you can compare the effects of market volatilities on Calvert High and California Municipal 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 Calvert High with a short position of California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert High and California Municipal.
Diversification Opportunities for Calvert High and California Municipal
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Calvert and California is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Calvert High Yield and California Municipal Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Municipal and Calvert 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 Calvert High Yield are associated (or correlated) with California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Calvert High i.e., Calvert High and California Municipal go up and down completely randomly.
Pair Corralation between Calvert High and California Municipal
Assuming the 90 days horizon Calvert High Yield is expected to generate 0.73 times more return on investment than California Municipal. However, Calvert High Yield is 1.36 times less risky than California Municipal. It trades about 0.22 of its potential returns per unit of risk. California Municipal Portfolio is currently generating about 0.07 per unit of risk. If you would invest 2,471 in Calvert High Yield on August 24, 2024 and sell it today you would earn a total of 17.00 from holding Calvert High Yield or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Calvert High Yield vs. California Municipal Portfolio
Performance |
| Timeline |
| Calvert High Yield |
| California Municipal |
Calvert High and California Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert High and California Municipal
The main advantage of trading using opposite Calvert High and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert High position performs unexpectedly, California Municipal 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 California Municipal will offset losses from the drop in California Municipal's long position.| Calvert High vs. Invesco Government Fund | Calvert High vs. Us Government Securities | Calvert High vs. Vanguard Short Term Government | Calvert High vs. Dreyfus Government Cash |
| California Municipal vs. California High Yield Municipal | California Municipal vs. Artisan High Income | California Municipal vs. Calvert High Yield | California Municipal vs. Metropolitan West High |
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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