Correlation Between California Bond and Icon Bond
Can any of the company-specific risk be diversified away by investing in both California Bond and Icon Bond 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 Icon Bond 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 Icon Bond Fund, you can compare the effects of market volatilities on California Bond and Icon Bond 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 Icon Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Icon Bond.
Diversification Opportunities for California Bond and Icon Bond
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between California and ICON is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Icon Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Bond Fund 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 Icon Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Bond Fund has no effect on the direction of California Bond i.e., California Bond and Icon Bond go up and down completely randomly.
Pair Corralation between California Bond and Icon Bond
Assuming the 90 days horizon California Bond Fund is expected to generate 2.62 times more return on investment than Icon Bond. However, California Bond is 2.62 times more volatile than Icon Bond Fund. It trades about 0.2 of its potential returns per unit of risk. Icon Bond Fund is currently generating about 0.21 per unit of risk. If you would invest 1,032 in California Bond Fund on August 29, 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 | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
California Bond Fund vs. Icon Bond Fund
Performance |
| Timeline |
| California Bond |
| Icon Bond Fund |
California Bond and Icon Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Icon Bond
The main advantage of trading using opposite California Bond and Icon Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Icon Bond 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 Icon Bond will offset losses from the drop in Icon Bond's long position.| California Bond vs. Tax Exempt Fund Of | California Bond vs. HUMANA INC | California Bond vs. Aquagold International | California Bond vs. Barloworld Ltd ADR |
| Icon Bond vs. Pimco Income Fund | Icon Bond vs. HUMANA INC | Icon Bond vs. Aquagold International | Icon Bond vs. Barloworld Ltd ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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