Correlation Between Floating Rate and California High
Can any of the company-specific risk be diversified away by investing in both Floating Rate and California High 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 Floating Rate and California High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and California High Yield Municipal, you can compare the effects of market volatilities on Floating Rate and California High 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 Floating Rate with a short position of California High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and California High.
Diversification Opportunities for Floating Rate and California High
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Floating and California is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield and Floating Rate 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 Floating Rate Fund are associated (or correlated) with California High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Floating Rate i.e., Floating Rate and California High go up and down completely randomly.
Pair Corralation between Floating Rate and California High
Assuming the 90 days horizon Floating Rate Fund is expected to generate 0.59 times more return on investment than California High. However, Floating Rate Fund is 1.7 times less risky than California High. It trades about 0.22 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.11 per unit of risk. If you would invest 726.00 in Floating Rate Fund on September 12, 2024 and sell it today you would earn a total of 92.00 from holding Floating Rate Fund or generate 12.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floating Rate Fund vs. California High Yield Municipa
Performance |
| Timeline |
| Floating Rate |
| California High Yield |
Floating Rate and California High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and California High
The main advantage of trading using opposite Floating Rate and California High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, California High 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 High will offset losses from the drop in California High's long position.| Floating Rate vs. California High Yield Municipal | Floating Rate vs. Nuveen Minnesota Municipal | Floating Rate vs. T Rowe Price | Floating Rate vs. Blrc Sgy Mnp |
| California High vs. T Rowe Price | California High vs. Bbh Intermediate Municipal | California High vs. Ab Bond Inflation | California High vs. Blrc Sgy Mnp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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