Correlation Between NYSE Composite and California Bond
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and California Bond Fund, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and California Bond.
Diversification Opportunities for NYSE Composite and California Bond
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and California is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and California Bond go up and down completely randomly.
Pair Corralation between NYSE Composite and California Bond
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.93 times more return on investment than California Bond. However, NYSE Composite is 1.93 times more volatile than California Bond Fund. It trades about 0.24 of its potential returns per unit of risk. California Bond Fund is currently generating about 0.21 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 66,978 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. California Bond Fund
Performance |
| Timeline |
NYSE Composite and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
California Bond Fund
Pair trading matchups for California Bond
Pair Trading with NYSE Composite and California Bond
The main advantage of trading using opposite NYSE Composite and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |