Correlation Between California Bond and Ab Sustainable
Can any of the company-specific risk be diversified away by investing in both California Bond and Ab Sustainable 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 Ab Sustainable 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 Ab Sustainable Thematic, you can compare the effects of market volatilities on California Bond and Ab Sustainable 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 Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Ab Sustainable.
Diversification Opportunities for California Bond and Ab Sustainable
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and STHAX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Ab Sustainable Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Thematic 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 Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Thematic has no effect on the direction of California Bond i.e., California Bond and Ab Sustainable go up and down completely randomly.
Pair Corralation between California Bond and Ab Sustainable
Assuming the 90 days horizon California Bond Fund is expected to generate 0.87 times more return on investment than Ab Sustainable. However, California Bond Fund is 1.15 times less risky than Ab Sustainable. It trades about 0.2 of its potential returns per unit of risk. Ab Sustainable Thematic is currently generating about 0.04 per unit of risk. If you would invest 1,032 in California Bond Fund on August 29, 2024 and sell it today you would earn a total of 16.00 from holding California Bond Fund or generate 1.55% 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. Ab Sustainable Thematic
Performance |
| Timeline |
| California Bond |
| Ab Sustainable Thematic |
California Bond and Ab Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Ab Sustainable
The main advantage of trading using opposite California Bond and Ab Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Ab Sustainable 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 Ab Sustainable will offset losses from the drop in Ab Sustainable's long position.| California Bond vs. Tax Exempt Fund Of | California Bond vs. HUMANA INC | California Bond vs. Aquagold International | California Bond vs. Barloworld Ltd ADR |
| Ab Sustainable vs. California Bond Fund | Ab Sustainable vs. Ambrus Core Bond | Ab Sustainable vs. Blrc Sgy Mnp | Ab Sustainable vs. Bbh Intermediate Municipal |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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