Correlation Between California Bond and Select International
Can any of the company-specific risk be diversified away by investing in both California Bond and Select International 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 Select International 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 Select International Equity, you can compare the effects of market volatilities on California Bond and Select International 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 Select International. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Select International.
Diversification Opportunities for California Bond and Select International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between California and Select is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Select International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select International 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 Select International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select International has no effect on the direction of California Bond i.e., California Bond and Select International go up and down completely randomly.
Pair Corralation between California Bond and Select International
Assuming the 90 days horizon California Bond Fund is expected to generate 0.48 times more return on investment than Select International. However, California Bond Fund is 2.1 times less risky than Select International. It trades about 0.03 of its potential returns per unit of risk. Select International Equity is currently generating about -0.09 per unit of risk. If you would invest 1,042 in California Bond Fund on September 13, 2024 and sell it today you would earn a total of 4.00 from holding California Bond Fund or generate 0.38% 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. Select International Equity
Performance |
| Timeline |
| California Bond |
| Select International |
California Bond and Select International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Select International
The main advantage of trading using opposite California Bond and Select International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Select International 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 Select International will offset losses from the drop in Select International's long position.| California Bond vs. Income Fund Income | California Bond vs. Usaa Nasdaq 100 | California Bond vs. Victory Diversified Stock | California Bond vs. Intermediate Term Bond Fund |
| Select International vs. International Developed Markets | Select International vs. Global Real Estate | Select International vs. Global Real Estate | Select International vs. Global Real Estate |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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