Correlation Between Ambrus Core and California Municipal
Can any of the company-specific risk be diversified away by investing in both Ambrus Core and California Municipal 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 Ambrus Core and California Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambrus Core Bond and California Municipal Portfolio, you can compare the effects of market volatilities on Ambrus Core and California Municipal 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 Ambrus Core with a short position of California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambrus Core and California Municipal.
Diversification Opportunities for Ambrus Core and California Municipal
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambrus and California is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ambrus Core Bond and California Municipal Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Municipal and Ambrus Core 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 Ambrus Core Bond are associated (or correlated) with California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Ambrus Core i.e., Ambrus Core and California Municipal go up and down completely randomly.
Pair Corralation between Ambrus Core and California Municipal
Assuming the 90 days horizon Ambrus Core Bond is expected to generate 1.01 times more return on investment than California Municipal. However, Ambrus Core is 1.01 times more volatile than California Municipal Portfolio. It trades about 0.06 of its potential returns per unit of risk. California Municipal Portfolio is currently generating about 0.03 per unit of risk. If you would invest 985.00 in Ambrus Core Bond on November 1, 2024 and sell it today you would earn a total of 7.00 from holding Ambrus Core Bond or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambrus Core Bond vs. California Municipal Portfolio
Performance |
| Timeline |
| Ambrus Core Bond |
| California Municipal |
Ambrus Core and California Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambrus Core and California Municipal
The main advantage of trading using opposite Ambrus Core and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambrus Core position performs unexpectedly, California Municipal 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 Municipal will offset losses from the drop in California Municipal's long position.| Ambrus Core vs. Morningstar Defensive Bond | Ambrus Core vs. Western Asset Municipal | Ambrus Core vs. Multisector Bond Sma | Ambrus Core vs. Ab Global Bond |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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