Correlation Between California Intermediate and Gurtin California

Can any of the company-specific risk be diversified away by investing in both California Intermediate and Gurtin California 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 Intermediate and Gurtin California into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between California Intermediate Term Tax Free and Gurtin California Municipal, you can compare the effects of market volatilities on California Intermediate and Gurtin California 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 Intermediate with a short position of Gurtin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Intermediate and Gurtin California.

Diversification Opportunities for California Intermediate and Gurtin California

0.94

Correlation Coefficient

California Intermediate  Gurtin California

Almost no diversification

The 3 months correlation between California and Gurtin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding California Intermediate Term T and Gurtin California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gurtin California and California Intermediate 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 Intermediate Term Tax Free are associated (or correlated) with Gurtin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gurtin California has no effect on the direction of California Intermediate i.e., California Intermediate and Gurtin California go up and down completely randomly.

Pair Corralation between California Intermediate and Gurtin California

Assuming the 90 days horizon California Intermediate Term Tax Free is expected to under-perform the Gurtin California. But the mutual fund apears to be less risky and, when comparing its historical volatility, California Intermediate Term Tax Free is 1.2 times less risky than Gurtin California. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Gurtin California Municipal is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  984.00  in Gurtin California Municipal on October 10, 2024 and sell it today you would lose (3.00) from holding Gurtin California Municipal or give up 0.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

California Intermediate Term T  vs.  Gurtin California Municipal

California Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Intermediate Term Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, California Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gurtin California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gurtin California Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Gurtin California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with California Intermediate and Gurtin California

The main advantage of trading using opposite California Intermediate and Gurtin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Intermediate position performs unexpectedly, Gurtin California 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 Gurtin California will offset losses from the drop in Gurtin California's long position.

The idea behind California Intermediate Term Tax Free and Gurtin California Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.