Correlation Between California High and Catalystmillburn
Can any of the company-specific risk be diversified away by investing in both California High and Catalystmillburn 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 High and Catalystmillburn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on California High and Catalystmillburn 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 High with a short position of Catalystmillburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Catalystmillburn.
Diversification Opportunities for California High and Catalystmillburn
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Catalystmillburn is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge and California High 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 High Yield Municipal are associated (or correlated) with Catalystmillburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of California High i.e., California High and Catalystmillburn go up and down completely randomly.
Pair Corralation between California High and Catalystmillburn
Assuming the 90 days horizon California High is expected to generate 1.1 times less return on investment than Catalystmillburn. But when comparing it to its historical volatility, California High Yield Municipal is 2.61 times less risky than Catalystmillburn. It trades about 0.08 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,501 in Catalystmillburn Hedge Strategy on September 13, 2024 and sell it today you would earn a total of 400.00 from holding Catalystmillburn Hedge Strategy or generate 11.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
California High Yield Municipa vs. Catalystmillburn Hedge Strateg
Performance |
Timeline |
California High Yield |
Catalystmillburn Hedge |
California High and Catalystmillburn Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with California High and Catalystmillburn
The main advantage of trading using opposite California High and Catalystmillburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Catalystmillburn 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 Catalystmillburn will offset losses from the drop in Catalystmillburn's long position.California High vs. Franklin Gold Precious | ||
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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