Correlation Between California Bond and Global Real
Can any of the company-specific risk be diversified away by investing in both California Bond and Global Real 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 Global Real 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 Global Real Estate, you can compare the effects of market volatilities on California Bond and Global Real 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 Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Global Real.
Diversification Opportunities for California Bond and Global Real
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between California and Global is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate 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 Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of California Bond i.e., California Bond and Global Real go up and down completely randomly.
Pair Corralation between California Bond and Global Real
Assuming the 90 days horizon California Bond Fund is expected to generate 0.38 times more return on investment than Global Real. However, California Bond Fund is 2.62 times less risky than Global Real. It trades about 0.2 of its potential returns per unit of risk. Global Real Estate is currently generating about 0.06 per unit of risk. If you would invest 1,038 in California Bond Fund on September 5, 2024 and sell it today you would earn a total of 15.00 from holding California Bond Fund or generate 1.45% 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. Global Real Estate
Performance |
| Timeline |
| California Bond |
| Global Real Estate |
California Bond and Global Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Global Real
The main advantage of trading using opposite California Bond and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.| California Bond vs. Maryland Short Term Tax Free | California Bond vs. Siit Ultra Short | California Bond vs. Calvert Short Duration | California Bond vs. Rbc Short Duration |
| Global Real vs. California Bond Fund | Global Real vs. Versatile Bond Portfolio | Global Real vs. Ab Impact Municipal | Global Real vs. Blrc Sgy Mnp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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