Correlation Between California Bond and Georgia Tax-free
Can any of the company-specific risk be diversified away by investing in both California Bond and Georgia Tax-free 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 Georgia Tax-free 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 Georgia Tax Free Bond, you can compare the effects of market volatilities on California Bond and Georgia Tax-free 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 Georgia Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Georgia Tax-free.
Diversification Opportunities for California Bond and Georgia Tax-free
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between California and Georgia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Georgia Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Georgia Tax Free 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 Georgia Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Georgia Tax Free has no effect on the direction of California Bond i.e., California Bond and Georgia Tax-free go up and down completely randomly.
Pair Corralation between California Bond and Georgia Tax-free
Assuming the 90 days horizon California Bond Fund is expected to generate 1.02 times more return on investment than Georgia Tax-free. However, California Bond is 1.02 times more volatile than Georgia Tax Free Bond. It trades about -0.06 of its potential returns per unit of risk. Georgia Tax Free Bond is currently generating about -0.07 per unit of risk. If you would invest 1,034 in California Bond Fund on November 6, 2024 and sell it today you would lose (3.00) from holding California Bond Fund or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Georgia Tax Free Bond
Performance |
| Timeline |
| California Bond |
| Georgia Tax Free |
California Bond and Georgia Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Georgia Tax-free
The main advantage of trading using opposite California Bond and Georgia Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Georgia Tax-free 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 Georgia Tax-free will offset losses from the drop in Georgia Tax-free's long position.| California Bond vs. Ab Small Cap | California Bond vs. Lord Abbett Small | California Bond vs. Queens Road Small | California Bond vs. William Blair Small |
| Georgia Tax-free vs. Pace Municipal Fixed | Georgia Tax-free vs. Touchstone Ultra Short | Georgia Tax-free vs. Mirova Global Green | Georgia Tax-free vs. Artisan High Income |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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