Correlation Between California Bond and Transamerica Intermediate
Can any of the company-specific risk be diversified away by investing in both California Bond and Transamerica Intermediate 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 Transamerica Intermediate 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 Transamerica Intermediate Bond, you can compare the effects of market volatilities on California Bond and Transamerica Intermediate 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 Transamerica Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Transamerica Intermediate.
Diversification Opportunities for California Bond and Transamerica Intermediate
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between California and Transamerica is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Transamerica Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate 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 Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of California Bond i.e., California Bond and Transamerica Intermediate go up and down completely randomly.
Pair Corralation between California Bond and Transamerica Intermediate
Assuming the 90 days horizon California Bond Fund is expected to generate 1.07 times more return on investment than Transamerica Intermediate. However, California Bond is 1.07 times more volatile than Transamerica Intermediate Bond. It trades about 0.18 of its potential returns per unit of risk. Transamerica Intermediate Bond is currently generating about 0.13 per unit of risk. If you would invest 1,038 in California Bond Fund on September 3, 2024 and sell it today you would earn a total of 13.00 from holding California Bond Fund or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Transamerica Intermediate Bond
Performance |
| Timeline |
| California Bond |
| Transamerica Intermediate |
California Bond and Transamerica Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Transamerica Intermediate
The main advantage of trading using opposite California Bond and Transamerica Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Transamerica Intermediate 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 Transamerica Intermediate will offset losses from the drop in Transamerica Intermediate's long position.| California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Vanguard California Long Term |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |