Correlation Between California Bond and Ab Global
Can any of the company-specific risk be diversified away by investing in both California Bond and Ab Global 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 Bond and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Ab Global Bond, you can compare the effects of market volatilities on California Bond and Ab Global 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 Bond with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Ab Global.
Diversification Opportunities for California Bond and Ab Global
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and ANAYX is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Ab Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Bond and California Bond 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 Bond Fund are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Bond has no effect on the direction of California Bond i.e., California Bond and Ab Global go up and down completely randomly.
Pair Corralation between California Bond and Ab Global
Assuming the 90 days horizon California Bond Fund is expected to generate 1.37 times more return on investment than Ab Global. However, California Bond is 1.37 times more volatile than Ab Global Bond. It trades about 0.18 of its potential returns per unit of risk. Ab Global Bond is currently generating about 0.2 per unit of risk. If you would invest 1,038 in California Bond Fund on September 3, 2024 and sell it today you would earn a total of 13.00 from holding California Bond Fund or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Ab Global Bond
Performance |
| Timeline |
| California Bond |
| Ab Global Bond |
California Bond and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Ab Global
The main advantage of trading using opposite California Bond and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Ab Global 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 Ab Global will offset losses from the drop in Ab Global's long position.| California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Vanguard California Long Term |
| Ab Global vs. Prudential Core Conservative | Ab Global vs. Calvert Conservative Allocation | Ab Global vs. Lord Abbett Diversified | Ab Global vs. Pgim Conservative Retirement |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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