Correlation Between California Bond and Virtus Emerging
Can any of the company-specific risk be diversified away by investing in both California Bond and Virtus Emerging 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 Virtus Emerging 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 Virtus Emerging Markets, you can compare the effects of market volatilities on California Bond and Virtus Emerging 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 Virtus Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Virtus Emerging.
Diversification Opportunities for California Bond and Virtus Emerging
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Virtus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Virtus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Emerging Markets 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 Virtus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Emerging Markets has no effect on the direction of California Bond i.e., California Bond and Virtus Emerging go up and down completely randomly.
Pair Corralation between California Bond and Virtus Emerging
Assuming the 90 days horizon California Bond is expected to generate 4.7 times less return on investment than Virtus Emerging. But when comparing it to its historical volatility, California Bond Fund is 2.5 times less risky than Virtus Emerging. It trades about 0.04 of its potential returns per unit of risk. Virtus Emerging Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,251 in Virtus Emerging Markets on November 27, 2024 and sell it today you would earn a total of 300.00 from holding Virtus Emerging Markets or generate 23.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Virtus Emerging Markets
Performance |
| Timeline |
| California Bond |
| Virtus Emerging Markets |
California Bond and Virtus Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Virtus Emerging
The main advantage of trading using opposite California Bond and Virtus Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Virtus Emerging 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 Virtus Emerging will offset losses from the drop in Virtus Emerging's long position.| California Bond vs. Federated Government Income | California Bond vs. Us Government Securities | California Bond vs. Dunham Porategovernment Bond | California Bond vs. John Hancock Government |
| Virtus Emerging vs. Transamerica Emerging Markets | Virtus Emerging vs. Goldman Sachs Emerging | Virtus Emerging vs. Angel Oak Ultrashort | Virtus Emerging vs. Franklin Federal Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |