Correlation Between California Bond and Calvert Moderate
Can any of the company-specific risk be diversified away by investing in both California Bond and Calvert Moderate 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 Calvert Moderate 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 Calvert Moderate Allocation, you can compare the effects of market volatilities on California Bond and Calvert Moderate 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 Calvert Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Calvert Moderate.
Diversification Opportunities for California Bond and Calvert Moderate
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Calvert is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Calvert Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Moderate All 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 Calvert Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Moderate All has no effect on the direction of California Bond i.e., California Bond and Calvert Moderate go up and down completely randomly.
Pair Corralation between California Bond and Calvert Moderate
Assuming the 90 days horizon California Bond is expected to generate 2.0 times less return on investment than Calvert Moderate. But when comparing it to its historical volatility, California Bond Fund is 2.16 times less risky than Calvert Moderate. It trades about 0.04 of its potential returns per unit of risk. Calvert Moderate Allocation is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,848 in Calvert Moderate Allocation on October 4, 2024 and sell it today you would earn a total of 184.00 from holding Calvert Moderate Allocation or generate 9.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
California Bond Fund vs. Calvert Moderate Allocation
Performance |
Timeline |
California Bond |
Calvert Moderate All |
California Bond and Calvert Moderate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with California Bond and Calvert Moderate
The main advantage of trading using opposite California Bond and Calvert Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Calvert Moderate 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 Calvert Moderate will offset losses from the drop in Calvert Moderate's long position.California Bond vs. Bbh Intermediate Municipal | California Bond vs. Pace Municipal Fixed | California Bond vs. Transamerica Intermediate Muni | California Bond vs. Baird Strategic Municipal |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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