Correlation Between California Bond and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both California Bond and Stone Harbor 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 Stone Harbor 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 Stone Harbor Emerging, you can compare the effects of market volatilities on California Bond and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Stone Harbor.
Diversification Opportunities for California Bond and Stone Harbor
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between California and Stone is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging 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 Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of California Bond i.e., California Bond and Stone Harbor go up and down completely randomly.
Pair Corralation between California Bond and Stone Harbor
Assuming the 90 days horizon California Bond is expected to generate 1.3 times less return on investment than Stone Harbor. But when comparing it to its historical volatility, California Bond Fund is 1.91 times less risky than Stone Harbor. It trades about 0.11 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 458.00 in Stone Harbor Emerging on September 5, 2024 and sell it today you would earn a total of 19.00 from holding Stone Harbor Emerging or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Stone Harbor Emerging
Performance |
| Timeline |
| California Bond |
| Stone Harbor Emerging |
California Bond and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Stone Harbor
The main advantage of trading using opposite California Bond and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| California Bond vs. Maryland Short Term Tax Free | California Bond vs. Siit Ultra Short | California Bond vs. Calvert Short Duration | California Bond vs. Rbc Short Duration |
| Stone Harbor vs. Multisector Bond Sma | Stone Harbor vs. Ab Bond Inflation | Stone Harbor vs. California Bond Fund | Stone Harbor vs. Maryland Tax Free Bond |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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