Correlation Between California Tax-free and Ambrus Core
Can any of the company-specific risk be diversified away by investing in both California Tax-free and Ambrus Core 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 California Tax-free and Ambrus Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Tax Free Fund and Ambrus Core Bond, you can compare the effects of market volatilities on California Tax-free and Ambrus Core 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 California Tax-free with a short position of Ambrus Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Tax-free and Ambrus Core.
Diversification Opportunities for California Tax-free and Ambrus Core
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Ambrus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding California Tax Free Fund and Ambrus Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambrus Core Bond and California Tax-free 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 California Tax Free Fund are associated (or correlated) with Ambrus Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambrus Core Bond has no effect on the direction of California Tax-free i.e., California Tax-free and Ambrus Core go up and down completely randomly.
Pair Corralation between California Tax-free and Ambrus Core
Assuming the 90 days horizon California Tax-free is expected to generate 1.3 times less return on investment than Ambrus Core. In addition to that, California Tax-free is 1.3 times more volatile than Ambrus Core Bond. It trades about 0.18 of its total potential returns per unit of risk. Ambrus Core Bond is currently generating about 0.3 per unit of volatility. If you would invest 987.00 in Ambrus Core Bond on November 28, 2024 and sell it today you would earn a total of 11.00 from holding Ambrus Core Bond or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Tax Free Fund vs. Ambrus Core Bond
Performance |
| Timeline |
| California Tax Free |
| Ambrus Core Bond |
California Tax-free and Ambrus Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Tax-free and Ambrus Core
The main advantage of trading using opposite California Tax-free and Ambrus Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Tax-free position performs unexpectedly, Ambrus Core 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 Ambrus Core will offset losses from the drop in Ambrus Core's long position.| California Tax-free vs. First American Funds | California Tax-free vs. Pace Select Advisors | California Tax-free vs. Doubleline Emerging Markets | California Tax-free vs. Aig Government Money |
| Ambrus Core vs. Nt International Small Mid | Ambrus Core vs. Goldman Sachs Small | Ambrus Core vs. Nuveen Small Cap | Ambrus Core vs. Needham Small Cap |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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