Correlation Between Power Dividend and California High-yield
Can any of the company-specific risk be diversified away by investing in both Power Dividend and California High-yield 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 Power Dividend and California High-yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Dividend Index and California High Yield Municipal, you can compare the effects of market volatilities on Power Dividend and California High-yield 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 Power Dividend with a short position of California High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Dividend and California High-yield.
Diversification Opportunities for Power Dividend and California High-yield
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and California is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Power Dividend Index 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 Power Dividend 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 Power Dividend Index are associated (or correlated) with California High-yield. 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 Power Dividend i.e., Power Dividend and California High-yield go up and down completely randomly.
Pair Corralation between Power Dividend and California High-yield
Assuming the 90 days horizon Power Dividend Index is expected to generate 2.66 times more return on investment than California High-yield. However, Power Dividend is 2.66 times more volatile than California High Yield Municipal. It trades about 0.28 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.19 per unit of risk. If you would invest 935.00 in Power Dividend Index on September 2, 2024 and sell it today you would earn a total of 49.00 from holding Power Dividend Index or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Dividend Index vs. California High Yield Municipa
Performance |
| Timeline |
| Power Dividend Index |
| California High Yield |
Power Dividend and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Dividend and California High-yield
The main advantage of trading using opposite Power Dividend and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Dividend position performs unexpectedly, California High-yield 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-yield will offset losses from the drop in California High-yield's long position.| Power Dividend vs. California High Yield Municipal | Power Dividend vs. Needham Aggressive Growth | Power Dividend vs. Legg Mason Partners | Power Dividend vs. Metropolitan West High |
| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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