Correlation Between California Bond and Invesco Gold
Can any of the company-specific risk be diversified away by investing in both California Bond and Invesco Gold 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 Invesco Gold 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 Invesco Gold Special, you can compare the effects of market volatilities on California Bond and Invesco Gold 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 Invesco Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Invesco Gold.
Diversification Opportunities for California Bond and Invesco Gold
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between California and Invesco is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Invesco Gold Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Gold Special 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 Invesco Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Gold Special has no effect on the direction of California Bond i.e., California Bond and Invesco Gold go up and down completely randomly.
Pair Corralation between California Bond and Invesco Gold
Assuming the 90 days horizon California Bond Fund is expected to generate 0.17 times more return on investment than Invesco Gold. However, California Bond Fund is 5.81 times less risky than Invesco Gold. It trades about 0.21 of its potential returns per unit of risk. Invesco Gold Special is currently generating about -0.2 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Invesco Gold Special
Performance |
| Timeline |
| California Bond |
| Invesco Gold Special |
California Bond and Invesco Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Invesco Gold
The main advantage of trading using opposite California Bond and Invesco Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Invesco Gold 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 Invesco Gold will offset losses from the drop in Invesco Gold's long position.| California Bond vs. Maryland Short Term Tax Free | California Bond vs. Angel Oak Ultrashort | California Bond vs. Barings Active Short | California Bond vs. Touchstone Ultra Short |
| Invesco Gold vs. Pimco Diversified Income | Invesco Gold vs. Western Asset Diversified | Invesco Gold vs. Pioneer Diversified High | Invesco Gold vs. Delaware Limited Term Diversified |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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