Correlation Between California Bond and Grant Park
Can any of the company-specific risk be diversified away by investing in both California Bond and Grant Park 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 Grant Park 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 Grant Park Multi, you can compare the effects of market volatilities on California Bond and Grant Park 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 Grant Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Grant Park.
Diversification Opportunities for California Bond and Grant Park
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between California and Grant is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Grant Park Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grant Park Multi 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 Grant Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grant Park Multi has no effect on the direction of California Bond i.e., California Bond and Grant Park go up and down completely randomly.
Pair Corralation between California Bond and Grant Park
Assuming the 90 days horizon California Bond Fund is expected to generate 0.67 times more return on investment than Grant Park. However, California Bond Fund is 1.5 times less risky than Grant Park. It trades about 0.07 of its potential returns per unit of risk. Grant Park Multi is currently generating about 0.02 per unit of risk. If you would invest 962.00 in California Bond Fund on September 12, 2024 and sell it today you would earn a total of 90.00 from holding California Bond Fund or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Grant Park Multi
Performance |
| Timeline |
| California Bond |
| Grant Park Multi |
California Bond and Grant Park Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Grant Park
The main advantage of trading using opposite California Bond and Grant Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Grant Park 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 Grant Park will offset losses from the drop in Grant Park's long position.| California Bond vs. Vanguard California Long Term | California Bond vs. Vanguard California Long Term | California Bond vs. SCOR PK | California Bond vs. Morningstar Unconstrained Allocation |
| Grant Park vs. T Rowe Price | Grant Park vs. Ab Bond Inflation | Grant Park vs. Doubleline Yield Opportunities | Grant Park vs. California Bond Fund |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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