Correlation Between California Bond and Guidepath(r) Absolute
Can any of the company-specific risk be diversified away by investing in both California Bond and Guidepath(r) Absolute 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 Guidepath(r) Absolute 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 Guidepath Absolute Return, you can compare the effects of market volatilities on California Bond and Guidepath(r) Absolute 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 Guidepath(r) Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Guidepath(r) Absolute.
Diversification Opportunities for California Bond and Guidepath(r) Absolute
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Guidepath(r) is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Guidepath Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Absolute Return 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 Guidepath(r) Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Absolute Return has no effect on the direction of California Bond i.e., California Bond and Guidepath(r) Absolute go up and down completely randomly.
Pair Corralation between California Bond and Guidepath(r) Absolute
Assuming the 90 days horizon California Bond is expected to generate 1.05 times less return on investment than Guidepath(r) Absolute. In addition to that, California Bond is 1.77 times more volatile than Guidepath Absolute Return. It trades about 0.06 of its total potential returns per unit of risk. Guidepath Absolute Return is currently generating about 0.1 per unit of volatility. If you would invest 972.00 in Guidepath Absolute Return on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Guidepath Absolute Return or generate 1.03% 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. Guidepath Absolute Return
Performance |
| Timeline |
| California Bond |
| Guidepath Absolute Return |
California Bond and Guidepath(r) Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Guidepath(r) Absolute
The main advantage of trading using opposite California Bond and Guidepath(r) Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Guidepath(r) Absolute 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 Guidepath(r) Absolute will offset losses from the drop in Guidepath(r) Absolute'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. Franklin California Tax Free |
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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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