Correlation Between California Bond and Blackrock High
Can any of the company-specific risk be diversified away by investing in both California Bond and Blackrock High 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 Blackrock High 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 Blackrock High Equity, you can compare the effects of market volatilities on California Bond and Blackrock High 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 Blackrock High. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Blackrock High.
Diversification Opportunities for California Bond and Blackrock High
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Blackrock is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Blackrock High Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock High Equity 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 Blackrock High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock High Equity has no effect on the direction of California Bond i.e., California Bond and Blackrock High go up and down completely randomly.
Pair Corralation between California Bond and Blackrock High
Assuming the 90 days horizon California Bond Fund is expected to under-perform the Blackrock High. But the mutual fund apears to be less risky and, when comparing its historical volatility, California Bond Fund is 2.26 times less risky than Blackrock High. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Blackrock High Equity is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,778 in Blackrock High Equity on November 3, 2024 and sell it today you would earn a total of 90.00 from holding Blackrock High Equity or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
California Bond Fund vs. Blackrock High Equity
Performance |
| Timeline |
| California Bond |
| Blackrock High Equity |
California Bond and Blackrock High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Blackrock High
The main advantage of trading using opposite California Bond and Blackrock High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Blackrock High 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 Blackrock High will offset losses from the drop in Blackrock High's long position.| California Bond vs. T Rowe Price | California Bond vs. Growth Portfolio Class | California Bond vs. Ab Global Bond | California Bond vs. Tax Managed Large Cap |
| Blackrock High vs. Putnam Global Financials | Blackrock High vs. Gabelli Global Financial | Blackrock High vs. John Hancock Financial | Blackrock High vs. Prudential Financial Services |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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