Correlation Between California Bond and Us Strategic
Can any of the company-specific risk be diversified away by investing in both California Bond and Us Strategic 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 Us Strategic 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 Us Strategic Equity, you can compare the effects of market volatilities on California Bond and Us Strategic 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 Us Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Us Strategic.
Diversification Opportunities for California Bond and Us Strategic
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between California and RUSTX is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Us Strategic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Strategic Equity 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 Us Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Strategic Equity has no effect on the direction of California Bond i.e., California Bond and Us Strategic go up and down completely randomly.
Pair Corralation between California Bond and Us Strategic
Assuming the 90 days horizon California Bond is expected to generate 1.55 times less return on investment than Us Strategic. But when comparing it to its historical volatility, California Bond Fund is 2.38 times less risky than Us Strategic. It trades about 0.22 of its potential returns per unit of risk. Us Strategic Equity is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,801 in Us Strategic Equity on August 24, 2024 and sell it today you would earn a total of 48.00 from holding Us Strategic Equity or generate 2.67% 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. Us Strategic Equity
Performance |
| Timeline |
| California Bond |
| Us Strategic Equity |
California Bond and Us Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Us Strategic
The main advantage of trading using opposite California Bond and Us Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Us Strategic 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 Us Strategic will offset losses from the drop in Us Strategic's long position.| California Bond vs. Vanguard California Long Term | California Bond vs. HUMANA INC | California Bond vs. Aquagold International | California Bond vs. Barloworld Ltd ADR |
| Us Strategic vs. Great West Loomis Sayles | Us Strategic vs. Mutual Of America | Us Strategic vs. Boston Partners Small | Us Strategic vs. Applied Finance Explorer |
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.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |