Correlation Between California Bond and Miller Convertible
Can any of the company-specific risk be diversified away by investing in both California Bond and Miller Convertible 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 Miller Convertible 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 Miller Vertible Bond, you can compare the effects of market volatilities on California Bond and Miller Convertible 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 Miller Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Miller Convertible.
Diversification Opportunities for California Bond and Miller Convertible
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Miller is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Miller Vertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Vertible Bond 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 Miller Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Vertible Bond has no effect on the direction of California Bond i.e., California Bond and Miller Convertible go up and down completely randomly.
Pair Corralation between California Bond and Miller Convertible
Assuming the 90 days horizon California Bond is expected to generate 2.74 times less return on investment than Miller Convertible. But when comparing it to its historical volatility, California Bond Fund is 1.13 times less risky than Miller Convertible. It trades about 0.04 of its potential returns per unit of risk. Miller Vertible Bond is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,287 in Miller Vertible Bond on October 25, 2024 and sell it today you would earn a total of 7.00 from holding Miller Vertible Bond or generate 0.54% 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. Miller Vertible Bond
Performance |
| Timeline |
| California Bond |
| Miller Vertible Bond |
California Bond and Miller Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Miller Convertible
The main advantage of trading using opposite California Bond and Miller Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Miller Convertible 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 Miller Convertible will offset losses from the drop in Miller Convertible's long position.| California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free |
| Miller Convertible vs. Morningstar Defensive Bond | Miller Convertible vs. T Rowe Price | Miller Convertible vs. Ambrus Core Bond | Miller Convertible vs. Intermediate Term Tax Free Bond |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |