Correlation Between California Municipal and Polen Us

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

By analyzing existing cross correlation between California Municipal Portfolio and Polen Small Pany, you can compare the effects of market volatilities on California Municipal and Polen Us 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 Municipal with a short position of Polen Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Municipal and Polen Us.

Diversification Opportunities for California Municipal and Polen Us

-0.39

Correlation Coefficient

California Municipal  Polen Us

Very good diversification

The 3 months correlation between California and Polen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding California Municipal Portfolio and Polen Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Small Pany and California Municipal 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 Municipal Portfolio are associated (or correlated) with Polen Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Small Pany has no effect on the direction of California Municipal i.e., California Municipal and Polen Us go up and down completely randomly.

Pair Corralation between California Municipal and Polen Us

Assuming the 90 days horizon California Municipal Portfolio is expected to generate 0.11 times more return on investment than Polen Us. However, California Municipal Portfolio is 8.79 times less risky than Polen Us. It trades about 0.07 of its potential returns per unit of risk. Polen Small Pany is currently generating about -0.12 per unit of risk. If you would invest  1,373  in California Municipal Portfolio on December 21, 2024 and sell it today you would earn a total of  9.00  from holding California Municipal Portfolio or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

California Municipal Portfolio  vs.  Polen Small Pany

California Municipal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in California Municipal Portfolio are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, California Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Polen Small Pany

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polen Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with California Municipal and Polen Us

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

The idea behind California Municipal Portfolio and Polen Small Pany 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.