Correlation Between California Bond and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both California Bond and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners Fund, you can compare the effects of market volatilities on California Bond and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Longleaf Partners.
Diversification Opportunities for California Bond and Longleaf Partners
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Longleaf is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of California Bond i.e., California Bond and Longleaf Partners go up and down completely randomly.
Pair Corralation between California Bond and Longleaf Partners
Assuming the 90 days horizon California Bond is expected to generate 4.3 times less return on investment than Longleaf Partners. But when comparing it to its historical volatility, California Bond Fund is 3.2 times less risky than Longleaf Partners. It trades about 0.04 of its potential returns per unit of risk. Longleaf Partners Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,976 in Longleaf Partners Fund on November 27, 2024 and sell it today you would earn a total of 413.00 from holding Longleaf Partners Fund or generate 20.9% 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. Longleaf Partners Fund
Performance |
| Timeline |
| California Bond |
| Longleaf Partners |
California Bond and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Longleaf Partners
The main advantage of trading using opposite California Bond and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' 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 |
| Longleaf Partners vs. Vanguard Energy Index | Longleaf Partners vs. Pimco Energy Tactical | Longleaf Partners vs. Fidelity Advisor Energy | Longleaf Partners vs. Gamco Natural Resources |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |