Correlation Between Gmo Emerging and California Bond
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and California Bond 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 Gmo Emerging and California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Emerging Country and California Bond Fund, you can compare the effects of market volatilities on Gmo Emerging and California Bond 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 Gmo Emerging with a short position of California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and California Bond.
Diversification Opportunities for Gmo Emerging and California Bond
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gmo and California is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Country and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond and Gmo Emerging 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 Gmo Emerging Country are associated (or correlated) with California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and California Bond go up and down completely randomly.
Pair Corralation between Gmo Emerging and California Bond
Assuming the 90 days horizon Gmo Emerging is expected to generate 2.01 times less return on investment than California Bond. In addition to that, Gmo Emerging is 1.04 times more volatile than California Bond Fund. It trades about 0.09 of its total potential returns per unit of risk. California Bond Fund is currently generating about 0.19 per unit of volatility. If you would invest 1,032 in California Bond Fund on August 28, 2024 and sell it today you would earn a total of 15.00 from holding California Bond Fund or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gmo Emerging Country vs. California Bond Fund
Performance |
| Timeline |
| Gmo Emerging Country |
| California Bond |
Gmo Emerging and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and California Bond
The main advantage of trading using opposite Gmo Emerging and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, California Bond 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 Bond will offset losses from the drop in California Bond's long position.| Gmo Emerging vs. Jpmorgan Emerging Markets | Gmo Emerging vs. T Rowe Price | Gmo Emerging vs. Sit Emerging Markets | Gmo Emerging vs. Emerging Markets Bond |
| California Bond vs. Maryland Short Term Tax Free | California Bond vs. Angel Oak Ultrashort | California Bond vs. Barings Active Short | California Bond vs. Touchstone Ultra Short |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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