Correlation Between California Bond and Highland Merger
Can any of the company-specific risk be diversified away by investing in both California Bond and Highland Merger 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 Highland Merger 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 Highland Merger Arbitrage, you can compare the effects of market volatilities on California Bond and Highland Merger 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 Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Highland Merger.
Diversification Opportunities for California Bond and Highland Merger
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between California and Highland is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage 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 Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of California Bond i.e., California Bond and Highland Merger go up and down completely randomly.
Pair Corralation between California Bond and Highland Merger
Assuming the 90 days horizon California Bond Fund is expected to generate 3.17 times more return on investment than Highland Merger. However, California Bond is 3.17 times more volatile than Highland Merger Arbitrage. It trades about 0.1 of its potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.23 per unit of risk. If you would invest 1,028 in California Bond Fund on November 27, 2024 and sell it today you would earn a total of 5.00 from holding California Bond Fund or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Highland Merger Arbitrage
Performance |
| Timeline |
| California Bond |
| Highland Merger Arbitrage |
California Bond and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Highland Merger
The main advantage of trading using opposite California Bond and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.| California Bond vs. Federated Government Income | California Bond vs. Us Government Securities | California Bond vs. Dunham Porategovernment Bond | California Bond vs. John Hancock Government |
| Highland Merger vs. Tax Managed International Equity | Highland Merger vs. Transamerica Funds | Highland Merger vs. Qs International Equity | Highland Merger vs. Dreyfusstandish Global Fixed |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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