Correlation Between California Bond and International Opportunity
Can any of the company-specific risk be diversified away by investing in both California Bond and International Opportunity 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 International Opportunity 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 International Opportunity Portfolio, you can compare the effects of market volatilities on California Bond and International Opportunity 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 International Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and International Opportunity.
Diversification Opportunities for California Bond and International Opportunity
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between California and International is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and International Opportunity Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Opportunity 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 International Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Opportunity has no effect on the direction of California Bond i.e., California Bond and International Opportunity go up and down completely randomly.
Pair Corralation between California Bond and International Opportunity
Assuming the 90 days horizon California Bond is expected to generate 3.22 times less return on investment than International Opportunity. But when comparing it to its historical volatility, California Bond Fund is 4.28 times less risky than International Opportunity. It trades about 0.18 of its potential returns per unit of risk. International Opportunity Portfolio is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,007 in International Opportunity Portfolio on November 29, 2024 and sell it today you would earn a total of 92.00 from holding International Opportunity Portfolio or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. International Opportunity Port
Performance |
| Timeline |
| California Bond |
| International Opportunity |
California Bond and International Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and International Opportunity
The main advantage of trading using opposite California Bond and International Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, International Opportunity 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 International Opportunity will offset losses from the drop in International Opportunity's long position.| California Bond vs. Fdzbpx | California Bond vs. Ffcdax | California Bond vs. Fxybjx | California Bond vs. Furyax |
| International Opportunity vs. The Hartford International | International Opportunity vs. Oklahoma College Savings | International Opportunity vs. L Mason Qs | International Opportunity vs. L Abbett Growth |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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