Correlation Between California Bond and Federated Short-intermedia
Can any of the company-specific risk be diversified away by investing in both California Bond and Federated Short-intermedia 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 Federated Short-intermedia 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 Federated Short Intermediate Duration, you can compare the effects of market volatilities on California Bond and Federated Short-intermedia 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 Federated Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Federated Short-intermedia.
Diversification Opportunities for California Bond and Federated Short-intermedia
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Federated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short-intermedia 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 Federated Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short-intermedia has no effect on the direction of California Bond i.e., California Bond and Federated Short-intermedia go up and down completely randomly.
Pair Corralation between California Bond and Federated Short-intermedia
Assuming the 90 days horizon California Bond Fund is expected to generate 2.36 times more return on investment than Federated Short-intermedia. However, California Bond is 2.36 times more volatile than Federated Short Intermediate Duration. It trades about 0.22 of its potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.16 per unit of risk. If you would invest 1,035 in California Bond Fund on September 1, 2024 and sell it today you would earn a total of 16.00 from holding California Bond Fund or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
California Bond Fund vs. Federated Short Intermediate D
Performance |
| Timeline |
| California Bond |
| Federated Short-intermedia |
California Bond and Federated Short-intermedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Federated Short-intermedia
The main advantage of trading using opposite California Bond and Federated Short-intermedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Federated Short-intermedia 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 Federated Short-intermedia will offset losses from the drop in Federated Short-intermedia's long position.| California Bond vs. Income Fund Income | California Bond vs. Usaa Nasdaq 100 | California Bond vs. Intermediate Term Bond Fund | California Bond vs. Usaa Intermediate Term |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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