Correlation Between High Yield and California High
Can any of the company-specific risk be diversified away by investing in both High Yield 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 High Yield and California High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Portfolio and California High Yield Municipal, you can compare the effects of market volatilities on High Yield 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 High Yield with a short position of California High. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and California High.
Diversification Opportunities for High Yield and California High
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between High and California is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Portfolio 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 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 High Yield Portfolio 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 High Yield i.e., High Yield and California High go up and down completely randomly.
Pair Corralation between High Yield and California High
Assuming the 90 days horizon High Yield Portfolio is expected to generate 0.58 times more return on investment than California High. However, High Yield Portfolio is 1.71 times less risky than California High. It trades about 0.05 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.0 per unit of risk. If you would invest 853.00 in High Yield Portfolio on September 14, 2024 and sell it today you would earn a total of 4.00 from holding High Yield Portfolio or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Portfolio vs. California High Yield Municipa
Performance |
| Timeline |
| High Yield Portfolio |
| California High Yield |
High Yield and California High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and California High
The main advantage of trading using opposite High Yield and California High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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.| High Yield vs. California High Yield Municipal | High Yield vs. Gamco Global Telecommunications | High Yield vs. Ab Impact Municipal | High Yield vs. Franklin High Yield |
| California High vs. Copeland Risk Managed | California High vs. Franklin High Income | California High vs. Intal High Relative | California High vs. Western Asset 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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